Vancouver’s industrial real estate industry is made up of two types of markets: those that are strata owned and those that are not. Love or hate it, the strata market continues to dominate.
“The strata market is alive and well, but I’m personally not a fan because it limits tenants,” said Jeff Miller, Vice President of Industrial in Oxford Properties Group. “Strata is uniquely Vancouver. It’s not as ingrained or important anywhere else.”
However, not everyone shares Miller’s point of view. For Lee Hester, Senior Vice President of Industrial Sales and Leasing at JLL and Beth Berry, Director of Industrial Development at Beedie Development Group, strata ownership allows small and medium sized business to grow, and creates a more stable market.
“Strata is good thing for the industrial market,” said Lee. “We are an owner based city, we all want to own. It’s a Vancouver phenomenon.”
According to Lee, 90% of industrial buyers are businesses with less than 10 employees who prefer to live within 20 minutes of their property.
“I love strata,” said Berry. “Strata buyers are typically private and family owned companies with a succession plan, not big distribution companies who need flexibility to grow. These types of buyers make the market steady and strong.”
So while turnover rates stay low, so too do the vacancy levels. In 2016, Vancouver’s industrial real estate market saw an average 2.4% vacancy rate and a $9 per square foot asking price. As we head into 2017, demand continues to remain strong, as Miller notes that for every one property a realtor has five buyers. Consequently municipalities like Pitt Meadows, Richmond, and Delta have become sought-after areas of development. In addition, new infrastructure such as the Port Mann Bridge has eased previous transportation issues for trucks to travel to and from the warehouses.
Do you prefer a strata or a freehold market? Tweet @naiopvancouver and let us know!