Demand for industrial space in Vancouver is so voracious that CBRE believes it could run out of land in a few years.
According to commercial real estate firm CBRE, a confluence of e-commerce as well as Vancouver being situated between the Pacific Ocean and mountains is resulting in surging real estate prices and demand for warehouse space. In fact, industrial rents increased 16% last year, to a record of $11.86 per square foot.
“There is a critical shortage of industrial land in Vancouver,” CBRE Canada’s Vice Chairman Paul Morassutti told Bloomberg. “It was our estimation that they could potentially, literally run out of industrial land by the early 2020s.”
Meanwhile, in Canada’s largest city the industrial market had a robust showing in 2018. While rents did not rise as much as they did in Vancouver, the $7 per square foot increase, supply is well behind demand. To finish the year, Toronto’s downtown has North America’s lowest office vacancy rate (2.7%), and rents in the most popular towers surged a 14%, reaching $35.37 per square foot. To catch up to demand, a more flurry of new supply is expected, however, the timing might be precarious as it should align with the next recession.
Commercial real estate investment kept inclining, setting a record in 2018 when it hit $49.3 billion—68% above the 10-year average. Apartment vacancies in Vancouver, Toronto, Ottawa, Montreal and Halifax were also below 2% in 2018.
CBRE also believes that rental apartments will see growth in co-living concepts this year because of rapidly rising rents throughout Canada’s largest cities.
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