Ottawa’s industrial market is the tightest it has ever been. Vacancy sits at 2.1%. In fact, that is effectively zero for modern warehouse space. E-commerce, last-mile logistics, and government supply chains drive demand. As a result, cap rates have compressed to historic lows. Therefore, replacement cost is the only way to add new supply for investors.
Ottawa Industrial Submarkets
| Submarket | Vacancy | Avg Lease Rate (psf) | Profile |
|---|---|---|---|
| Sheffield/Glen/East Industrial | 1.5% | $12-$16 | Logistics parks, Amazon distribution, highway access |
| West/Ottawa River | 2.0% | $14-$18 | Kanata-adjacent, tech manufacturing, cleaner space |
| South/Merivale/Colonnade | 2.5% | $11-$15 | Flex industrial, auto service, showroom hybrids |
| Orleans/East End | 3.0% | $10-$13 | Older stock, value-add potential, LRT proximity |
Types of Industrial Property
- Warehouse/Distribution: 20,000+ sqft, 24-32 ft clear height, dock loading, truck courts. This is the most institutional asset type. Cap rates 4.75-5.5%.
- Flex Industrial: 3,000-15,000 sqft, 18-22 ft clear, mix of warehouse and office. Specifically, this is an owner-user and small investor stronghold. Cap rates 5.5-6.5%.
- Light Manufacturing: 5,000-30,000 sqft, specialized power and ventilation. In addition, these feature longer lease terms. Cap rates 5.5-7%.
- Outdoor Storage/Industrial Land: Fenced yard for equipment, containers, or fleet parking. However, this is scarce inside the Greenbelt. Premium pricing at 5-7% cap.
What to Look For in an Industrial Acquisition
- Clear height: Under 22 ft limits your tenant pool. For instance, modern logistics tenants demand 28+ ft. A 16-ft clear building is functionally obsolete for warehouse use.
- Dock doors vs. grade doors: Dock-high loading is standard for distribution. In contrast, grade-level doors serve contractors and smaller tenants. The ratio matters for tenant mix.
- Truck court depth: 120-140 ft is minimum for 53-ft trailers. Therefore, measure it carefully. A tight truck court kills warehouse utility.
- Power: 600V/3-phase is standard. However, 208V single-phase limits you to lighter uses. Check amperage. Specifically, 400A vs 800A vs 1600A changes the tenant pool radically.
- Sprinklers: ESFR sprinklers allow high-pile storage. In contrast, standard sprinklers cap storage height. This alone can swing cap rate 50 bps.
Frequently Asked Questions
Why are Ottawa industrial cap rates so low?
Supply is the main factor. Almost no new speculative industrial construction exists inside the Greenbelt. In addition, land is scarce. Demand from logistics, government, and tech keeps vacancy near zero. In short, low supply plus steady demand equals compressed cap rates.
What’s the minimum size for institutional industrial?
Institutions target 50,000+ sqft multi-tenant or single-tenant net-leased. Below that, you enter private investor territory. Specifically, that means a wider buyer pool but less liquidity.
Is outdoor storage a good investment?
Yes, if you can find it. Outdoor industrial storage yards inside the Greenbelt trade at a premium. Fleet parking, container storage, and equipment yards have few alternatives. In particular, this asset offers low capex and high barrier to entry.