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Special Report

Canada Industrial National Report

2Q 2023

Surge in New Supply to Drive Temporary Uptick in Vacancy; Long-Term Demand to Remain Healthy

Outlook for industrial sector remains positive. Canada’s economy grew at a healthy pace in the first quarter of 2023. Real GDP remained in expansion mode, thanks to robust performance recorded in January. Over 200,000 jobs were created within the first three months, which helped maintain the unemployment rate near a historic low. More importantly, output in sectors that often utilize industrial spaces grew at a healthy rate. GDP in the transportation and warehousing sector, for instance, registered an average rate of increase of 11 per cent year-over-year between January and February, which far outpaced total GDP growth. This strong momentum aided a 57 per cent annual increase in net absorption in the first quarter. With an increasing likelihood of a soft landing for the Canadian economy in 2023, demand in the industrial sector should be well supported. The national average vacancy rate will tick up slightly amid a surge in supply, but should still end the year sub-2 per cent.
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