Photo by Jes
Since industrial real estate demand in Calgary is increasing, as we reported in our earlier post, let's have a closer look at its development according to the Avison Young survey released in March.
Avison Young’s Calgary Industrial Landlord Vacancy Index is a composite of the vacancies of the 21 largest multi-tenant landlords in Calgary who represent the majority of the active leasing market and about 33% of the city’s industrial inventory. The index is down from 8.0% in the third quarter of 2010 and down from 11.2% one year previous. The index was between 9% and 11% for the 18 months following the start of the downturn. This decrease indicates a continued trend toward increased economic activity and future growth.
In northeast and southeast Calgary, the index decreased from the previous quarter: it is 8.6% in northeast Calgary (decreased by 1%), and 7.4% southeast Calgary (decreased by 2.6%). It grew in the central portion of the city to 3.8% from 1.4%.
There are two main types of industrial space: flex and warehouse. Flex space has less than 10,000 square feet and a higher proportion of showroom and/or office space. Warehouse space is a larger building with little office and/or showroom. The vacancy index of flex style product is 5.5% while warehouse space has a vacancy index of 6.8%. The gap between them is continuously decreasing. In the third quarter of 2009 the difference was 8%, now it is only 1.3%.
In 2010, there were 47 industrial sales. This is up to 34% from the 228 million dollars shown in 2009 in 35 sales. The most significant industrial deal in 2010 was part of the $2 billion portfolio transaction between Kingsett Capital Inc. and Alberta Investment Management Corp., and ING Summit Industrial Fund GP Inc. 7140 40th Street SE was sold for a purchase price of $30,084,923. We also expect some new strong sales in 2011, like the sale of Trammell Crow’s three AirFreight & Logistics Centre properties.
You can find the full version of the report here.