Ottawa Industrial Market Report

Large-bay sector contributing to higher vacancy. Demand in Ottawa’s industrial sector has held strong for small-bay properties. Despite elevated interest rates, these assets saw limited impact, with the vacancy rate remaining subdued given limited supply growth. The recent increase in the metro’s overall industrial vacancy can mainly be attributed to rising supply in large-bay spaces, as well as moderating demand. Ottawa’s total inventory has increased by over 10 per cent since the start of 2019 amid the surge in online shopping. While at the same time, demand for e-commerce-related space appears to be stabilizing, leading to a softening in pre-leasing activity. Rather than being an indication of weakening fundamentals, this rising vacancy is a sign of the ongoing rebalancing between supply and demand. This provides tenants, particularly large-bay users, with better availability in a market that recently experienced sub-1 per cent vacancy rates. For the rest of 2024, vacancy is projected to trend higher, likely reaching a more balanced level as further supply is expected to enter the market.