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Surging Supply Helps Provide Some Balance to
Market as Long-Term Outlook Remains Optimistic
Supply-side dynamics the main driver in rising vacancy. Net absorption hit 5.8 million square feet in 2023, well above the metro’s long-term average of 2.1 million. When compared to Vancouver, Calgary’s industrial sector acted as a lower cost alternative and grew in popularity as a distribution hub servicing all of western Canada. Combined with historic population growth, demand for distribution and logistics space remained elevated. Despite healthy demand dynamics, the metro’s vacancy rate inched up and returned to a level not seen since early 2021 as development hit new highs. Calgary’s overall industrial inventory expanded by 6.0 per cent throughout 2023, with roughly 30 per cent not pre-leased on completion. While leasing activity has begun to soften since the middle of last year — especially among big-box users — elevated supply growth was the main contributor in pushing vacancy rates up over the course of 2023.