CoStar Group forecasts Canada's industrial vacancy rate will decline steadily through 2028, setting the stage for a return to positive rent growth by late 2027. The national industrial vacancy rate climbed from 1.5% in 2022 to 4.75% in 2025 amid a wave of new construction and slowing absorption, but has already eased to 4.5%, and CoStar now expects it to fall below 4% by the end of 2027 and to 3.25% by the end of 2028, slightly lower than its previous forecast of 3.5% by the end of 2028. Net absorption, which turned negative in the first half of 2025, has rebounded to average about 5 million square feet per quarter since the start of 2026, and CoStar forecasts it will average 7.5 million square feet per quarter from the third quarter of 2026 through the end of 2027 before settling at about 5 million square feet per quarter starting in 2028. Mario Lefebvre, chief economist for Canada at CoStar Group, said absorption has bounced back since late 2025 and, combined with a sharp pullback in new construction, is pushing vacancy steadily lower, with rent growth expected to remain roughly flat for most of 2027 before trending upward late in the year and continuing into 2028. Lefebvre added that the balance of risks remains tilted to the downside, citing trade and tariff uncertainty, elevated operating costs including higher fuel costs, and a declining population, though longer-term demand should grow with consumer spending while the development pipeline remains modest.
CoStar Group IncCoStar's own forecast of declining Canadian industrial vacancy and a return to positive rent growth by late 2027 is a positive development for its core commercial real estate data/analytics business.
