Metro Vancouver’s robust industrial market has seen sales activity surpass $150 million during the first quarter of the year alone, according to Avison Young’s Spring 2019 Metro Vancouver Industrial Overview.
Continuing the red-hot trend set by the record-breaking $1.8 billion in investment last year, the market reached a historically low vacancy rate of 1.2% at the end of Q1 2019.
Strong demand and constrained land supply pushed the region’s vacancy level down to the lowest level nationwide for the quarter, Avison Young noted in its study.
The crucial factor is “the ravenous appetite for industrial real estate among tenants, owner-occupiers, developers as well as private and institutional investors to date in 2019,” the report added. “Developers remain unable to keep up with demand as industrial vacancy in Metro Vancouver has now remained at less than 2% for the past three years (and less than 1.5% through 2018) despite the addition of more than 10.2 million square feet in the past 36 months.”
“While construction of lease product is continuing by institutional investors seeking to hold assets long term as well as by those developers who acquired land at historical costs, the volume is unlikely to have much of an impact on vacancy,” Avison Young principal Garth White explained.
“Much of this new lease supply is focused on large logistics/distribution users and is often preleased years in advance of completion. Small- to mid-sized industrial tenants are increasingly left with very limited options. Furthermore, we continue to see a shift in the development pipeline to strata projects, which will have significant consequences in the near future.”
Eight out of 13 industrial markets in Metro Vancouver had vacancy rates of less than 1% at the end of the first quarter. The epicentres of activity were Maple Ridge/Pitt Meadows, New Westminster and Tsawwassen First Nation (TFN), all of which had vacancy rates at 0.1% and lower.
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