If you’re looking for industrial real estate properties, it won’t take long until you realize that supply is not only limited, but also extremely competitive and expensive. So what’s preventing businesses from moving to our much more abundant and affordable neighbour, Alberta?
From housing to supply, the Metro Vancouver market can’t compete with their land and lease rates. Calgary and Edmonton have the square footage and price tags that tenants are looking for, especially for those who need custom spaces with room to grow.
So what’s keeping them here?
“The move doesn’t make up for losing staff,” said Jason Kiselbach, Vice President, Personal Real Estate Corporation for CBRE Limited. “I can’t name one tenant who has moved to Alberta just because of affordability and space.”
Kiselbach notes that Vancouver’s market conditions here are simply too good to leave. This includes our city’s growing population, which increases by 100 people per day. In addition, consumer spending has been growing at record rates, and B.C. has led the country in GDP growth.
“Staffing is the hardest challenge for our clients,” said Ryan Kerr, Principal of Industrial, Investment, Sales & Leasing at Avison Young. “They’re not going to pick up and move provinces if they have to start over again and hire from scratch.”
Despite the attractive conditions, it may not be enough to keep business around.
“If we can’t accommodate businesses, they’ll adapt and go somewhere else. This affects jobs,” said Robert Eyers, Director of Leasing at Wesgroup Properties. “This will affect our economy. If we can’t provide the facilities and space, companies will find somewhere and someone who can.”
One of the ways that tenants are trying to secure industrial real estate properties is by purchasing well in advance; a practice that was seldom seen in this market until recently. The requirement is to now look at least 12 to 18 months for pending vacancies before you need to move.
Others are doing deals with much longer lead way.
“We’re doing deals two years in advance. Companies are learning they have to get in early, and hope that their company doesn’t grow or decline substantially,” said Eyers.
So are we in a land crisis?
“I disagree massively with this statement,” said Eyers. “Compared to other cities like New York and Tokyo, there is a lot of room for growth. There are far denser cities that are doing much better than we are at balancing demand with supply.”
According to the experts, there are budding areas throughout Metro Vancouver that are seeing more investment than others. This includes South Vancouver, North Burnaby, and Campbell Heights in Surrey.
Do you think we could lose out to great tenants to Alberta or Saskatchewan? Tweet @naiopvancouver and share your thoughts!