Competitive market predicted for Lethbridge industrial space

The latest Lethbridge industrial market report from Avison Young predicts a landlord’s market by the end of 2024. It notes after a lag in new development, low vacancy and continued demand will create a competitive local market for industrial space.  

“2024 is already looking very different from previous years,” says Josh Marti, principal and senior associate in Avison Young’s Lethbridge office. “For example, we used to see large-format users at significantly lower rates; now we are not seeing any industrial leases at rates less than $9.50 per-square-foot.” 

Avison Young says tenants should start planning for renewals early and can expect higher rates. It notes lease rates for new builds are driven by inflated construction prices and the cost for tenants to build-out their space is more than double pre-pandemic levels. 

The report says investors acted conservatively in 2023 because of market uncertainty but pent-up demand and potential for an interest rate drop this year will likely prompt investors to re-enter the market. 

“While investors have started to adjust their cap rate expectations in light of current market conditions, there is a bit of a disconnect from buyers who are still expecting the kind of cap rates we saw in 2022,” says Doug Mereska, managing director in Avison Young’s Lethbridge office.