The industrial vacancy rate in Vancouver has dropped to 0.6% and, unsurprisingly, it\u2019s driving up prices.<\/p>\n
One reason for such a low vacancy rate is the dearth of land on which to build, Jason Kiselbach, managing director and senior vice president of CBRE Vancouver, says.<\/p>\n
\u201cOne of the fundamental issues we have in Vancouver is supply of available land for industrial\u2014you have a mountain to the north, an ocean to the west, the U.S. border to the south, and an agricultural land reserve to the east,\u201d Kiselbach said. \u201cIt may look like land is available for development but it\u2019s restricted.\u201d<\/p>\n
Consequently, demand for industrial space has vastly outpaced demand, with most projects in development already pre-leased, Kiselbach added. In fact, as of September, the average asking lease price in Vancouver is $15.37 psf.<\/p>\n
One of the complicating factors is, because demand for industrial space is driven by e-commerce, which requires proximity to population centres, it isn\u2019t feasible to build facilities further away where there\u2019s an abundance of land. However, Kiselbach says that Abbotsford and Chilliwack, which are roughly an hour outside of Vancouver, would be sufficient.<\/p>\n
\u201cLease rates have escalated over the last three years and vacancy rates have compressed, but there have been a few things we\u2019ve learned: for industrial, you need to be close to where the population is, so some companies just have to be in Vancouver to get same-day delivery to customers,\u201d Kiselbach said. \u201cAlso for industrial, real estate accounts for 6% of companies\u2019 expenditures. The cost of real estate isn\u2019t as important as location, labour and transportation costs, so we haven\u2019t hit a point where people say they can\u2019t afford to be in Vancouver. But at the same time, some companies are lowering their footprints in Vancouver and doing more work from Calgary.\u201d<\/p>\n
In the next year, Vancouver will not have an industrial-use facility with more than 50,000 sq ft, highlighting both the critical shortage and the need to plan years in advance. Larger facilities take about three and a half years to complete and, Kiselbach says, approvals in certain jurisdictions aren\u2019t cumbersome like they can be for residential developments.<\/p>\n
Still, don\u2019t expect prices to contract, especially considering there\u2019s 6 million sq ft of construction occurring in the sector right now.<\/p>\n
\u201cBut it can\u2019t be delivered fast enough and it’s pre-sold before it\u2019s delivered, and that\u2019s how it will continue to operate,\u201d he said. \u201cDevelopers will continue looking further outside the core.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
The industrial vacancy rate in Vancouver has dropped to 0.6% and, unsurprisingly, it\u2019s driving up prices. One reason for such a low vacancy rate is the dearth of land on which to build, Jason Kiselbach, managing director and senior vice president of CBRE Vancouver, says. \u201cOne of the fundamental issues we have in Vancouver is […]<\/p>\n","protected":false},"author":6,"featured_media":23968,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/9320"}],"collection":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/comments?post=9320"}],"version-history":[{"count":1,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/9320\/revisions"}],"predecessor-version":[{"id":23967,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/9320\/revisions\/23967"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media\/23968"}],"wp:attachment":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media?parent=9320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/categories?post=9320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/tags?post=9320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}