The document summarizes the industrial real estate market in Calgary, Alberta in Q2 2017. It finds that while unemployment remains high at 9.3%, the industrial market has shown resilience. Vacancy rates were 8.9% overall but higher for large spaces over 50,000 square feet. Leasing activity was up 13% from the previous quarter. The outlook is that the market appears to be in recovery as rental rates increase and demand grows, especially for smaller spaces.

1. Calgary, AB
Industrial Q22017
MARKETBEAT
Economic Indicators
Market Indicators
Overall Net Absorption/Overall Asking Rent
4Q TRAILING AVERAGE
Overall Vacancy
cushmanwakefield.com
Economy
Unemployment decreased marginally in May 2017 but still remains the
highest in the country at 9.3%. While this has affected the economy of
Calgary as a whole, the city’s industrial market showed resilience. As a
major hub in Western Canada, logistics, manufacturing and distribution
companies accounted for a flurry of activity in the marketplace. In
addition, a Fortune 500 company has positioned itself for entry into the
Calgary industrial market. Market stakeholders have conveyed
confidence that the industrial market has indeed turned a corner.
Market Overview
A cursory look at market vacancy has revealed certain patterns. There
was more activity in the smaller bay segments (less than 20,000 square
feet (sf)) compared to larger bay segments. While the market-wide
vacancy rate stood at 8.9% in second quarter 2017, the smaller bays
represented just 2.1% of market vacancy, while bays more than 50,000 sf
accounted for 5.5% of total vacancy. In other words, the large bay
availability is heavily influencing the overall high vacancy rate in the
industrial market.
The feeling of pervasive negativity is dissipating in the market. Quarter-
over-quarter leasing activity was up by 13%, indicating that the industrial
market is gaining momentum. While the market posted a negative
absorption of 370,896 sf, it is possible that shadow vacancies may have
accounted for this result. The Northeast submarket experienced positive
absorption of 98,511 sf while the Southeast and Central submarkets,
combined, saw negative absorption of 469,407 sf. Despite the negative
absorption, there was evidence of expansion as some firms moved into
bigger spaces. For example, VIAD-GES, a global full-service live-events
company, represented by Cushman & Wakefield, doubled its space to
60,000 sf.
Walmart, Gordon Foods, Sobeys and others are transforming the hamlet
of Balzac in Rocky View County, a greater Calgary regional district, into a
hub for distribution of goods. The activity located here continues to have
a significant impact on the Calgary Metropolitan Area industrial market as
the demand experienced here have assisted in keeping asking rates
stable.
Of the 194,729 sf of inventory under construction, 37% will arrive to
market in third quarter 2017. Although the amount of square footage
under construction is at historic lows, there are growing indicators that the
industrial market is just a few more deals away from a new cycle of
development. Pension funds, Real Estate Investment Trusts (REITS) and
private equity players are well positioned to start construction and supply
the inventory required by the market in the foreseeable future.
Outlook
The Calgary industrial market appears to be in recovery mode. Market
activity has increased with respect to prospective tenant tours. While
landlords’ expectations are still frozen, the market has started to witness
a moderate increase in rental rates, especially in the smaller bay product.
The uncertainty surrounding the price of oil notwithstanding, Cushman &
Wakefield forecasts a strengthening in rental rates across all bays in the
next year. Active demand for small bays, stable logistics and
manufacturing companies moving from smaller bays to bigger ones, lack
of construction in the market, and strong interest from manufacturing and
e-commerce giants south of the border, will help to absorb excess space
in the Calgary market. The industrial land market is also steadily
improving. All these factors will help improve confidence in a market that
is already showing signs of bullishness.
Q2 16 Q2 17
12-Month
Forecast
Calgary Employment 802K 828K
Calgary Unemployment 8.1% 9.3%
Canada Unemployment 6.9% 6.6%
Q2 16 Q2 17
12-Month
Forecast
Overall Vacancy 8.1% 8.9%
Net Absorption (sf) -434,751 -370,896
Under Construction (sf) 273,925 194,729
Average Asking Rent* $9.14 $8.71
CALGARY INDUSTRIAL
Historical Average = 5.7%
*Rental rates reflect net asking $psf/year
$9
$10
$11
$12
$13
$14
$15
-400,000
0
400,000
800,000
1,200,000
1,600,000
2011 2012 2013 2014 2015 2016 Q2 2017
Net Absorption, SF Gross Asking Rent, $ PSF
0.0%
2.5%
5.0%
7.5%
10.0%
2011 2012 2013 2014 2015 2016 Q2 2017
Historical Average = 5.9%

2. Calgary, AB
Industrial Q22017
MARKETBEAT
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.
The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for
occupiers and investors around the world. Cushman & Wakefield is among the largest commercial real estate services firms with
revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global
occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and
valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple
sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or
representations as to its accuracy.
SUBMARKET
INVENTORY
(SF)
YTD
LEASING
ACTIVITY
(SF)
OVERALL
VACANCY
RATE
CURRENT
QUARTER
ABSORPTION
(SF)
YTD
NET OVERALL
ABSORPTION
(SF)
UNDER
CNSTR
(SF)
YTD TOTAL
CNSTR
COMPLETIONS
(SF)
OVERALL
WEIGHTED
AVG . NET
RENT*
OVERALL
WEIGHTED
AVG. ADD.
RENT
OVERALL
WEIGHTED AVG.
GROSS
RENT
Northeast 42,274,326 1,159,272 10.8% 98,511 -35,357 98,943 0 $8.79 $4.04 $12.83
Southeast 56,238,050 1,473,800 8.8% -289,492 -166,076 95,786 0 $7.96 $3.38 $11.34
Central 25,397,234 383,085 5.8% -179,915 -268,235 0 0 $10.53 $4.70 $15.23
CALGARY TOTALS 123,909,610 3,016,157 8.9% -370,896 -469,668 194,729 0 $8.71 $3.86 $12.57
*Rental rates reflect asking $psf/year
Key Lease Transactions Q2 2017
PROPERTY SF TENANT
TRANSACTION
TYPE
SUBMARKET
South Foothills Industrial Park Building I 65,770 Spectrum Supply Chain Solutions Inc. Headlease Southeast
Stoney Industrial Centre – Building 3 50,341 Sandstone Pharmacies Headlease Southeast
5805 to 5885 51st SE 45,759 Dexter Trailers Headlease Southeast
5342 72nd Avenue SE 33,963 Flying Squirrel Sports Headlease Southeast
3916 61st Avenue SE 32,467 Pacific Coast Warehousing Headlease Southeast
838 55th Avenue NE
32,264 Raytheon Canada Limited Headlease Southeast
Key Sales Transactions Q2 2017
PROPERTY SF SELLER / BUYER PRICE / $PSF SUBMARKET
2930 Centre Avenue NE 110,522 Brewer’s Distributor Ltd | York Realty $6.4m | $58 Northeast
8616-8700 Venture Avenue SE 88,795 Plains Fabrication | 1593289 Alberta Ltd $16.74m | $189 Southeast
Cushman & Wakefield
111 – 5th Avenue SW,
Suite 1730
Calgary, AB T2P 3Y6
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For more information, contact:
Ayo Peters,
Research Manager
Tel: +1 403 261 1111
ayo.peters@cushwake.com