Red Deer Industrial Report – Q4 2016

Prior to joining Salomons Commercial I worked as a research analyst for Cushman & Wakefield Calgary. I was tasked with monitoring vacancy for the commercial market which was a sizable task considering there is an approximately 120 million square feet (sf) of Industrial and 70 million sf of Office. Having made the move to Red Deer, I have begun building a database to track and monitor vacancy for all commercial listings as well as auditing inventory in the Red Deer Area.

Initial estimates put the total inventory around 20 million sf which comprises of: 13.5 million sf of Industrial; 2 million sf of Office; and 4.5 million sf of Commercial/Retail.

Historically (2011-2014) Soderquist Appraisals have reported Industrial vacancy at around 3.5% with inventory growing at a healthy 3% each year. A positive net absorption – the change in occupied space measured between two time periods – of around 400,000 in 2012 and 2013 kept vacancy low and saw net lease rates grow as high as $16.00 to $18.00 per square foot (psf) back in mid-2014.

This came to an end starting in late 2014 with the fall in oil prices. The subsequent downturn has resulted in thousands of job losses and cuts to capital expenditures for all major oil companies and the Industrial vacancy in Red Deer doubled from 3.65% (Sept 2014) to 7.5% (Sept 2015).

As of September 2015 there was approximately 989,000 sf of vacant space on the market. Since then, more and more listings have come onto the market with the most high profile being Finning’s 107,000 sf facility in Edgar. The result has been an ample amount of choice for tenant’s seeking out space that has been typical of Red Deer: mechanical repair shops with drive-in bays and some office. That being said, there still remains sub-categories of Industrial space that remain tough to come by such as buildings with 30’+ ceiling heights or warehouses with dock loading.

The few deals that are being done right now have seen considerable discounts offered from the asking rents. Some starting as low as $5.00 and $6.00 psf. In these cases the Landlords have recognized the need to compromise and concede, in the short term, to get the tenant to commit to a lease. We have seen both short term leases at reduced rates and longer leases starting off heavily discounted, then escalating from year two onwards.

Vacancy currently sits around 12%, based on active listings on the market. There are a number of empty buildings that are not on the market which have been excluded. New construction permits has slowed considerably and as a result, inventory will not see the growth we have seen through 2011-2014.

Current inventory (including areas within the City of Red Deer and others in Red Deer County) is approximately 13.5 million sf with 1.6 million sf of vacant space on the market. Based on historical absorption, to get to a more balanced market would take around 12 months ; to return to pre-2014 vacancy levels it would take 2-3 years.

~Max Field

Please click here for past industrial reports from Soderquist Appraisals

Industrial Chart


Industrial Vacant Space Red Deer Area

Listing Size Range

No. Listings

Total sf

Avg. Asking Rate per sf

1,000-1,999 sf



 $                10.84

2,000-4,999 sf



 $                11.21

5,000-9,999 sf



 $                12.03

10,000-19,999 sf



 $                12.79

20,000 sf +



 $                11.38

Industrial Total



 $                11.54