CHICAGO—The US and Canadian industrial markets continued to improve in the past year, with user demand pushing down vacancy rates in almost every market and swelling the development pipeline in a far smaller group of regions, according to Avison Young's Spring 2015 Canada, US and UK Industrial Market Report, released earlier this week. The company's experts also believe that the sector will continue growing steadily in 2015. Volatile energy prices remain an unknown factor, but should only impact particular markets and industry sectors. And new development, although steady, will remain relatively modest in many markets.

“It's low, and this is indicative of a development market that is being tempered by the need for real equity,” Erik Foster, principal and practice leader of Avison Young's Chicago-based industrial capital markets team, tells GlobeSt.com. Prior to the recession, developers could sometimes launch a project after kicking in only 10%, but today much more is required, and “it is causing a lot of developers to be more strategic.”

Industrial developers in Canada and the US had more than 117 million square feet under construction at the end of the first quarter. Although this is a relatively healthy amount, Foster points out that in the peak year of 2007, that number was 220 million. Distribution centers make up the lion's share of current construction, and will support the growing supply-chain networks of companies like Canadian Tire, Walmart, Home Depot, FedEx and Hyundai Mobis in Canada, and Amazon.com, Cardinal Health, Midwest Warehouse & Distribution Systems, Southern Wine and Spirits, and ALDI in the US.