“Our major market indicators were nearly flat year-over-year, suggesting that the local market is normalizing,” says Mereska. “With both construction expenses and interest rates coming down, the margin between input costs and market rental rates is strong enough to encourage new construction and to begin easing some of the tight vacancy in Lethbridge.”
The vacancy rate for industrial spaces remains low at 4.13 per cent in Q1 this year, increasing by less than 0.1 per cent from the same time in 2024. That is despite an increase of approximately 170,000 square feet of total industrial inventory.
This means that Lethbridge remains a “landlord’s market,” characterized by high demand for spaces with low vacancies.
Associate Vinko Smiljanec says more spaces will need to be added to meet continuing demand.
“The tight vacancy rate reflects very little usable space but mostly represents either irregular, or class B and C spaces,” says Smiljanec. “With most industrial operators showing a preference for flexible features such as high ceilings and good yard space, many available spaces just aren’t feasible to a wide range of users. With few spec builds in our market, there will still be a need for space in 2025.”
Developers are currently planning to create around 98,500 square feet of new commercial and industrial spaces in Lethbridge this year.
However, the report notes that tariffs imposed by the United States may strain the ability for some companies to invest in infrastructure.
The full report can be found on AvisonYoung.ca
