Demand for industrial property in and around Red Deer may have eased slightly, suggests a recent survey of the market. But vacancy rates remain low.
Soderquist Appraisals Ltd.’s annual industrial market survey, which was conducted in July and August, calculated the local vacancy rate at 3.64 per cent — up from 3.10 per cent in 2013 and 3.44 per cent in 2012. About 468,678 square feet of new industrial building space was added during the past year, but only 236,619 square feet of this was absorbed.
“I wouldn’t read too much into that,” said Mike Garcelon, CEO and senior appraiser with Soderquist.
“I would expect a balanced market to be in the four to six per cent range, so it is a little bit tight.”
Since 2011, said Garcelon, more than a million square feet of industrial building space has been added to the local inventory. That indicates that the market has continued to spur development.
As for the lower absorption rate this year, he believes it reflects exceptionally high rates in the preceding years.
“I think what’s going on is in 2012 and 2013 we had a lot of pent-up demand from the recession.”
The Soderquist survey considered 15 local industrial parks, plus a catch-all category for stand-alone industrial lands. Government-owned property, such as the City of Red Deer’s public works yards, was excluded.
“This is the first year we’ve had any space from Queens (Business Park) included,” said Garcelon, explaining that the survey is limited to completed buildings.
Queens accounted for 404,775 square feet of the additional space for 2014, with Clearview Industrial Park (40,212 square feet), McKenzie Industrial Park, Burnt Lake Business Park (38,079 square feet) and Edgar Industrial Park (47,043 square feet) other big contributors.
“These numbers all show a very, very healthy, growing market with lots of demand,” said Garcelon of the survey’s findings.
The full report can be found on Soderquist’s website at www.soderquist.ca, under “Studies.”