Inspired by Asia, industrial facilities are evolving

Voracious demand and a dearth of available land have compelled industrial real estate developers in Vancouver to get creative.

Stacked industrial facilities optimize square footage while tightening the reins on construction budgets, and although not very common outside of Asia and parts of Europe, Ilya Tihanenoks, a broker and associate vice president of CBRE Vancouver, noted the region has about 707,056 sq ft of large-format stacked industrial space and over 500,000 sq ft of small-bay stacked industrial and flex space under construction. He says they’re here to stay.

“What we’ve been used to seeing is warehouses with mezzanines you walk up, but now you’re getting full second and third floors accessible by elevators. It’s less traditional industrial but it’s been evolving in Vancouver. We’re very much in the early days of stacked industrial and that’s what it’s going to look like,” Tihanenoks told CREW. “The main driver is land pricing and land availability, so if you’re a developer who doesn’t have hundreds of acres in your land bank for future uses, you have to hit the market with owner-users, land speculators and others, and, in core markets, you end up buying land at a hefty price tag. The only way to maximize what zoning allows is stacked industrial.”

Vancouver’s zoning bylaws are more liberal than surrounding municipalities’, allowing for some creativity, but Tihanenoks suspects it’s only a matter of time before the entirety of Greater Vancouver follows suit. However, Vancouver isn’t the only municipality in the metropolitan that allows stacked industrial facilities. In 2019, Oxford Properties Group launched Canada’s first stacked industrial development in Burnaby, a 707,000 sq ft warehouse with an upper floor accessible to transport trucks.

Additionally, Union Allied is building 1308 Adanac in East Vancouver, and according to the company’s investment and acquisition director, the development’s offerings are consistent with the most common inquiries, which are for dock loading, high ceilings, street exposure and transportation, but most importantly it reflects the industrial sector’s evolving needs.

“The global shift to e-commerce during the pandemic has only increased demand for our supply-constrained city. The city has to undergo a reshuffle where people who have existing amenities, like grade access and dock loading, need to begin asking themselves if they need it given the high cost of these spaces, or if their business is of a lighter industrial use and can survive in a multilevel environment” said Michael Chiang. “Moving forward, the way to adapt is to develop true logistics based on multilevel industrial like those in other parts of the world have limited land, like Hong Kong, Japan, Taiwan.”