Ottawa industrial market caught between defence spending boom and trade uncertainty

Ottawa's industrial real estate market is experiencing a "push and pull" — increased defence spending fueling new tenant interest while economic uncertainty dampens activity, according to commercial real estate brokers working in the city.

Federal defence spending is set to rise from $75 billion annually to more than $95 billion by 2030, prompting companies to tour potential sites for factories, research and development facilities, and warehouses in the National Capital Region. Steve Piercey, senior vice-president at CBRE's Ottawa office, said he's seeing "everything from multinationals and nationals to local startups" eyeing large properties with lease space.

Yet despite the touring activity, no major defence contracts have been finalized. "We're seeing some user groups that have delayed decisions because of what's happening on tariffs, et cetera, and then we're seeing a very robust level of activity coming in from the defence spending," Piercey said.

Ottawa's industrial availability rate in the third quarter was 4.2 per cent — third-tightest among 11 major Canadian cities surveyed by CBRE, behind Winnipeg at 3.1 per cent and Calgary at 3.6 per cent. The availability rate has nearly doubled over the past three years as new supply entered the market and businesses downsized or stayed in place.

Matt Shackell, vice-president of Ottawa-based Lennard Commercial Realty, echoed the tension. "A lot of groups are still very hesitant to make offers on things right now. We're busy, but we're busy doing deals that normally took two to three months [that are now] taking six to eight months. It's very, very frustrating. There's so much business that could get done, and we're so far from getting it done simply because of the shock that everybody is in."

Geopolitical uncertainty and U.S. trade turmoil are cited as key disruptions. Piercey remains bullish on the long-term outlook for the sector.