Manufacturing Sector Becoming a More Significant
Demand Driver for Industrial Space in Canada
Industrial sector a top performer. Between 2020 and the end of 2022, industrial-related space demand has been fierce amid a rise in e-commerce-related activity brought on by the pandemic. National vacancy fell 70 basis points, reaching a historic low, which helped the average asking rent grow nearly 40 per cent. These robust fundamentals were a byproduct of changing consumer behaviour and the adaptation by retailers to support online shopping. While e-commerce sales are softening as the share of total retail sales is down from the 2020 peak, it still remains well above the long-term average. Despite this easing in demand, new drivers are emerging in Canada’s manufacturing sector. Nearshoring, which brings manufacturing closer to home, is gaining momentum as companies look to mitigate supply chain risks brought on by ongoing global insecurity. This growing sector, coupled with still-elevated e-commerce activity, will likely aid industrial performance over the long-term.