With a population now in excess of 1 million people, Ottawa is an exceptional place to live and work. Ottawa boasts a talented workforce, a strong public sector, and a growing technology and e-commerce sector. Ottawa’s industrial real estate remains strong, and will only get stronger.
Geographically, Ottawa services more people within a 500-kilometre range than most other Canadian cities. Major centres like Montreal, Toronto, Kitchener-Waterloo, and Hamilton are within a 5-hour drive. The U.S. border is less than two-hours away. Not surprisingly, Ottawa has become a choice destination for companies interested in leveraging Ottawa’s manufacturing and light assembly attributes.
Furthermore, while Ottawa was traditionally viewed as a secondary market for warehousing and distribution space, the rapid growth of e-commerce and the importance of a regional delivery model has resulted in Ottawa becoming a strategic location.
According to the CBRE Industrial MarketView report for the second quarter of 2021, the Ottawa East and Ottawa South submarkets (which collectively make up approximately 80% of the 32.6 million sq. feet of industrial inventory in Ottawa), had vacancy rates of just 2.5% and 1.8%, respectively.
The overall vacancy rate for Ottawa’s industrial real estate was reported as being just 2.0%. CBRE reported over 57,000 square feet of positive net absorption in the second quarter. The average asking net rental rate in Ottawa is now $12.06 per sq. foot. This average rate is 22% higher than the national average, and the second-highest in Canada.
“We have seen a shortage of industrial space within the urban boundary of Ottawa,” says Cory Wilson, Property Manager at First Bay Properties, “and we’ve witnessed significant development in nearby rural areas as a result, especially for larger-scale projects. The 417 Industrial Park is a 298+ acre business park in Russell Township, approximately 30 km southeast of downtown Ottawa. The Township reportedly sold out of industrial lands in 2015 but has since continued to develop and sell sites year-to-year. Within the past three years, the Township has sold 130+ acres. The location provides easy access to Highway 417; the heavily traveled east-west corridor between Ottawa and Montreal. The Park is rapidly growing in popularity as it provides affordable, generous lot sizes within proximity to urban amenities.”
Jonah Bonn, President of First Bay Properties says “while businesses seeking small industrial units for rent can find select inventory within the urban area, it is a challenge to find sites that are suitable for larger-scale developments.” Bonn continues, “as an example, Amazon located its newly constructed, 1,000,000 sf fulfillment warehouse on Boundary Road in the rural east end of the City. The Amazon development has sparked significant development activity on surrounding rural lands. This includes a proposal by Avenue31 to develop a 44-acre parcel of land directly across from the Amazon facility. Avenue 31 will accommodate 650,000 sq. feet of industrial space including a transport terminal and a wide range of rural industrial uses.”
According to CBRE, a significant supply of industrial product is now in the development pipeline. Over 30 applications are at various stages of review before the City of Ottawa. Once dull and uninspiring, Ottawa’s industrial real estate has emerged as an exciting sector across the National Capital Region. What’s more, there is no sign of a slowdown. It will be interesting to monitor this market evolve over the next few years, especially with respect to the interplay between rental rates and market supply as new product comes online.
First Bay Properties Inc. has a diverse portfolio under management including multi-tenant retail, office, and industrial spaces. Our tenants range from national restaurant chains and distribution companies to petroleum retailers, and financial service providers. We are well versed in all aspects of property management, from full-cycle accounting and lease administration to complex project management. We take great pride in our track record and our ability to provide personalized and cost-effective service.