There’s only one thing Vancouverites like to talk about more than the weather, and that’s real estate. Rarely has a day gone by over the past four years when a headline wasn’t dedicated to the current market. And while most focus on residential, there’s another sector that has been experiencing similar skyrocketing demands and sales figures: industrial real estate.
Currently at a nine year low, industrial property vacancies are sitting at 1.9%. Most notably there’s been a significant jump since 2015. In just under three years, absorption grew from $8.10 to $9.67.
Roy Pat from Colliers International shared with us a few major highlights that have shaped the current Metro Vancouver market in the past year:
1. Pre-Leasing (Well) in Advance
“From K-Bro Linens to Artizia, we’re seeing a growing trend of long lead times for businesses who need a lot of space in specialized facilities,” said Pat. “Most recently, a confidential tenant in Delta has leased 23 months in advance to secure the space they need. In today’s market, this is the only way to get what you need, at the time you want. You have to plan well in advance.”
2. Off Market Sales
The demand for industrial square footage is so high that properties don’t even hit the market before they’re snatched up. Last year, over $330 million in off market transactions were completed in Metro Vancouver. This includes the largest sale at 6845 Tilbury Road in Delta, which was purchased by the Dayhu Group of Companies for $47,925,000.
3. Port of Vancouver Acquisitions
According to a press release on their website, “The Vancouver Fraser Port Authority...has recently completed the purchase of three strategic industrial-zoned properties in Richmond and Port Coquitlam. The acquisitions were made to secure trade-enabling land to support future port growth, facilitate Canada’s trade and contribute to our local economy.” In total, they acquired $94,150,000 for 35.59 acres in Metro Vancouver.
4. East Vancouver Land Values
In 2016 and 2017, there were 13 property sales each year in East Van. However, there was one significant difference in 12 months: price per square foot.
“In 2016, the average price per buildable square foot was $122.30, and the average price per acre was $15,980,000. Last year, that changed from $158.46, and $20,707,000. What’s more telling is that the site size was on average smaller than 2016.”
So what does this mean for 2018? According to Pat, “we need to build more density” in order to keep Vancouver’s market thriving. And thanks to factors like the bridge tolls being removed from the Port Mann, the industrial market is thought to continue this upward trajectory throughout the Lower Mainland.
We’ll be covering these topics and more in our upcoming blogs, so keep an eye on our Twitter for updates!