The Calgary industrial real estate market remains sluggish due to the struggling local economy and low oil prices. While leasing activity increased in Q1 2017, new supply offset these gains resulting in a small increase in vacancy. Absorption was negative overall but an improvement over the prior year. The outlook is cautiously optimistic as vacancy rates stabilize and companies complete cost adjustments, but new construction remains slow due to economic uncertainty.

1. Calgary, AB
Industrial Q12017
MARKETBEAT
Economic Indicators
Market Indicators
Overall Net Absorption/Overall Asking Rent
4Q TRAILING AVERAGE
Overall Vacancy
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Economy
Employment in Calgary experienced a recovery in Q1 2017 as the
unemployment rate declined from 10.3% last quarter to 9.4%. However
this did not translate into positive news for the industrial commercial real
estate market. The Calgary economy remains sluggish, as do oil prices,
which continue to hover in the US$50 range. In 2016, 7,214 businesses
closed in Calgary Central as tenants rationalized facilities, up from 7,081
in 2015. In a bid to take advantage of lower property tax and no business
tax, some companies have moved to the Rocky View County. This trend
is expected to continue throughout 2017.
Market Overview
While there was an uptick in leasing activity in Q1 2017, this did not result
in positive net absorption. Gains made through leasing activity were offset
by the 151,877 square feet (sf) of new supply. The arrival of this space
helped push vacancy rates marginally upwards from 8.3% to 8.5%
quarter-over-quarter.
Absorption in Q1 2017 fell short of expectations but was not nearly as
weak as one year ago, which saw 480,392 sf of negative absorption. Of
the main submarkets, only the Southeast market posted positive
absorption, totaling 123,416 sf as transportation and logistics,
manufacturing and fabricating companies flocked to this area. The
Central market again returned negative absorption. It is possible that
tenants in this market, owing to their diverse businesses and their
reliance on micro-demand, have continued to struggle with the state of
the economy.
The Calgary industrial market continues to be driven by activity in
manufacturing, warehousing, and distribution sectors, of which there has
been increasing interest. This activity reinforces Calgary’s position as a
critical industrial distribution hub for Western Canada and the
Northwestern USA. These sectors have helped soften the strains and
stresses suffered as a result of the downturn in oil prices.
There is currently 309,894 sf of industrial space under construction. This
relatively low, at least historically speaking, figure signals that developers
continue to be somewhat wary of the current economic climate. While
Stonegate Industrial Building C and Harris Rebar Building are currently
under construction, there is only one project scheduled to get underway
in Q2 2017 which is Enright Capital’s 150,000-sf Building 3 at Airport
Crossing; further underscoring the cautiousness coming from developers.
Outlook
The Calgary industrial market appears to be nearing the bottom of the
cycle (negative absorption slowing/vacancy rate stabilizing) and an
optimistic view sees the early stages of recovery around the corner as
companies have completed prolonged periods of cost, labor and revenue
adjustments. While the pace of new supply to the market has slowed,
there remains an expectation of accelerating momentum in new
construction commencing later in 2017. Calgary’s location, considered
ideal for shipping and distribution across Western Canada, is deservedly
drawing interest from established tenants in other western North
American markets. Companies, such as Whirlpool, have recognized the
advantages of committing to Calgary. All of these factors combined have
created cautious optimism that the worst is behind the market.
Q1 16 Q1 17
12-Month
Forecast
Calgary Employment 799K 819K
Calgary Unemployment 8.4% 9.4%
Canada Unemployment 7.3% 6.7%
Q1 16 Q1 17
12-Month
Forecast
Overall Vacancy 7.6% 8.5%
Net Absorption (sf) (480,392) (98,772)
Under Construction (sf) 414,312 309,894
Average Asking Rent* $9.43 $8.73
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 Q1 2017
Net Absorption, SF Gross Asking Rent, $ PSF
0.0%
2.5%
5.0%
7.5%
10.0%
2011 2012 2013 2014 2015 2016 Q1 2017
Historical Average = 5.8%

2. Calgary, AB
Industrial Q12017
MARKETBEAT
About Cushman & Wakefield
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revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global
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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 42,248,962 527,138 11.0% (133,868) (133,868) 209,894 0 $8.87 $3.84 $12.71
Southeast 56,215,101 715,645 8.3% 123,416 123,416 100,000 151,877 $7.97 $3.38 $11.35
Central 25,397,234 171,935 5.1% (88,320) (88,320) 0 0 $10.59 $4.66 $15.25
CALGARY TOTALS 123,861,297 1,414,718 8.5% (98,772) (98,772) 309,894 151,877 $8.73 $3.76 $12.49
*Rental rates reflect asking $psf/year
Key Lease Transactions Q1 2017
PROPERTY SF TENANT
TRANSACTION
TYPE
SUBMARKET
Oxford Airport Business Park 165,000 Lowes Headlease Northeast
East Foothills Industrial Park Building 2 150,654 Stryder Transport Motor Freight Headlease Southeast
Portland Street Depot Building C 97,201 Calgary Archives Inc. Headlease Southeast
Foothills Phase II Building C 93,980 Cott Beverages Canada Headlease Southeast
South Foothills Industrial Park Building 3 93,000 Norampac Headlease Southeast
Stoney Industrial Centre – Building 3 76,444 Inova Systems Corp Headlease Southeast
Key Sales Transactions Q1 2017
PROPERTY SF SELLER / BUYER PRICE / $PSF SUBMARKET
5820 11th Street SE 225,160 SMI Holdings | Burns LD Ltd $19m | $84 Southeast
2855 10th Avenue NE 143,154 KS 925 | York Realty $15.75m | $110 Southeast
Cushman & Wakefield
111 – 5th Avenue SW,
Suite 1730
Calgary, AB T2P 3Y6
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For more information, contact:
Bob MacDougall,
Senior Managing Director
Tel: +1 403 261 1111
bob.macdougall@ca.cushwake.com