Future Cities

Emerging Industrial Markets: Ottawa

July 16, 2024 4 Minute Read

Expert Perspective

“Ottawa’s strong industrial real estate fundamentals have attracted many new investors and developers, resulting in 5.5% annual growth of the market’s total industrial inventory since 2022. Its strategic location within a prime logistics corridor between the Southern Ontario and Quebec markets provides easy access to the U.S. border. Total industrial inventory growth of 3.6% is expected by year-end 2025.”

Steve Piercey

Vice President, CBRE

Demographics

Approximately 20% of the 20 million Canadians who live within 250 miles (400 kilometers) of downtown Ottawa are aged 20 to 34—the biggest users of e-commerce, which is a prime demand driver for warehouse and distribution space. Population within a 50-mile radius is expected to grow by nearly 10% over the next five years.

Figure 1: Ottawa Population Analysis

Note: Analysis is of Canadian population only.
Source: Sitewise, CBRE Research, 2024.

Ottawa’s warehouse labor force of 30,894 is expected to grow by 14% by 2034, according to Oxford Economics and the Government of Canada Job Bank. The average salary for a non-supervisory warehouse worker is C$20.00 per hour (US$14.64).

Figure 2: Ottawa Warehouse & Storage Labor Fundamentals

Source: Oxford Economics, Government of Canada Job Bank, 2024.

Location Incentives

Over the past five years, there have been 28 economic incentive deals totaling more than $254 million for an average of $30,000 per new job in the Ottawa metropolitan area, according to fDi Intelligence.

According to CBRE’s Location Incentives Group, among the top incentive programs offered in Metro Ottawa is the Southern Ontario Fund for Investing in Innovation, which provides funding to high-growth small and medium enterprises in Southern Ontario. Businesses that typically receive these loans are at late-stage development of a new product or service.

Other popular incentive programs in Ottawa include the Eastern Ontario Development Fund, which provides funding and complementary services to businesses that create at least five new jobs and invest at least C$500,000. The Canada Strategic Investment Fund also provides funding for businesses with at least C$20 million in total project costs.

Figure 3: Top Incentive Programs

Source: fDi intelligence - IncentivesFlow.

Logistics Drivers

Ottawa offers numerous competitive advantages that make it attractive to industrial real estate investors. The market is just a two-hour drive from the Port of Montreal and a four-hour drive from the nation’s largest city, Toronto. Ottawa International Airport is home to many international logistics companies, including DHL, Exel, FedEx and UPS.

Supply & Demand

Ottawa accounts for just 1.9% of Canada’s total industrial real estate inventory, with a vacancy rate of just 2.8%.

Ottawa had the country’s fourth highest average asking rent in Q2 2024, just C$0.12 per sq. ft. less than that of Montreal, a market that is nearly 10 times larger. The addition of high-end new supply has also contributed to a 4.7% increase in Ottawa’s average net asking rent over the past 12 months.

Just 7,000 sq. ft. of new supply was delivered in the first half of 2024—the market’s lowest volume since H1 2021. However, with four buildings totaling 684,000 sq. ft. currently under construction, incoming new supply is expected to surpass the previous market high set in 2023.

Many planned projects won’t break ground until the developer secures an anchor tenant. Rosefellow’s 479,000-sq.-ft., two-building development in Kanata is nearing completion and Broccolini’s fully preleased 984,000-sq.-ft. warehouse and distribution center in Cornwall is well underway.

Figure 4: Ottawa Historical Data

Source: CBRE Research, Q2 2024.

Figure 5: Ottawa, Size Range Comparison

Source: CBRE Research, Q2 2024.