Ottawa’s industrial real estate market is struggling to meet demand for small-bay space and the larger properties coveted by clients in sectors such as defence, two major brokerages say. The vacancy rate for industrial space in Ottawa ticked up slightly in the third quarter — CBRE pegged it at 2.8 per cent, while Colliers said […]
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The vacancy rate for industrial space in Ottawa ticked up slightly in the third quarter — CBRE pegged it at 2.8 per cent, while Colliers said it was 2.6 per cent.
But both firms used the term “constrained” to describe the city’s industrial sector, which is grappling to accommodate a growing number of clients looking for space in a market with little new supply.
“Ottawa’s industrial market remains constrained due to a continued shortage of small- to medium-bay availability, which has limited current leasing opportunities,” CBRE noted in its third-quarter industrial market report released this week.
“As a result, many industrial tenants have opted to renew in place, with some owner-occupiers choosing to expand their existing facilities.”
Colliers also noted that small-bay space remains scarce, accounting for 16 of 20 transactions in the third quarter “and continuing to command a rental premium,” the company said in its Q3 National Market Snapshot released this week.
Colliers said the bump in vacancy in the third quarter was due “more to the timing and availability of several larger blocks of space rather than a broad-based deterioration in occupier demand.”
Much of that demand for larger chunks of real estate is being driven by defence, aerospace and other technology companies, the brokerage said.
According to Colliers, more than 95 per cent of the 3.2 million square feet of industrial space in Ottawa’s current construction pipeline has already been pre-leased to tenants such as Amazon, which is preparing to occupy a new 3.1-million-square-foot distribution centre in Barrhaven that’s expected to be completed in the fourth quarter of 2027.
Growing demand for large blocks of space from defence, aerospace and other tech firms “could further pressure large-block supply,” the brokerage said, adding that, unless developers start launching new speculative projects, “Ottawa could soon face a shortage of 50,000+ square foot options.”
CBRE said it expects to see “sustained interest” for industrial space from startups, established private-sector firms and federal government users.
“This level of activity is expected to support leasing momentum over the medium term through 2027 and 2028,” the company added in a news release this week.
Still, the firm sounded a note of caution.
The ongoing trade war between Canada and the U.S. has “contributed to elevated economic uncertainty despite tariff impacts remaining relatively limited in scope,” it said.
“While market fundamentals have remained resilient, this uncertainty has weighed more heavily on occupiers with cross-border exposure, prompting some to adopt a more cautious approach to decision-making.”
Both companies said average asking net rents have stayed relatively steady over the past 12 months at about $17 a square foot.
Major new leasing transactions in the third quarter included Marquee Pickleball signing on to rent more than 24,000 square feet in Colonnade BridgePort’s building at 2070-2092 Walkley Rd. and Multi-Glass Insulation Ltd.’s decision to lease just over 20,000 square feet in Manulife’s new development on Bantree Street in the city’s east end.