Growing smaller
Vancouver may be Canada’s biggest West Coast port but its industrial space is shrinking, not only in quantity but in scale.
CBRE Ltd. reports there were eight land transactions, totalling 83 acres, in the third quarter. Three of these, representing 70% of the total acreage, took place in Abbotsford.
“Given the ongoing tightening of the industrial land base in the core markets, developers are now looking to secure larger vacant land sites further out east more than ever before,” the report stated.
Meanwhile, absorption in Metro Vancouver during the first nine months of the year totalled 2.3 million square feet, positioning tenant demand to outstrip supply for the fourth consecutive year. Pegging the availability rate for space at 2.3%, CBRE said just 223,029 square feet of the 1.7 million square feet of new supply expected in the year’s final quarter is available for lease.
While this has boosted demand for industrial strata space, the supply is largely from infill space closer to the core that doesn’t serve large users requiring 30,000 to 100,000 square feet. Lee & Associates reports that users requiring more than 30,000 square feet are best served by Burnaby, Richmond, Delta and Surrey. The latter two markets account for 43% of space under construction in the region, making Delta the natural choice for Amazon’s commitment to 453,000 square feet in a GWL Realty Advisors Inc. project at Delta iPort, The Brick’s partnership with Beedie Industrial for 430,000 square feet in Delta Link Business Park (and room for an additional 100,000 square feet) and the BC Liquor Distribution Branch’s new 400,000-square-foot warehouse in Tilbury.
Meanwhile, in the region’s core, groups such as Port Capital Group are building strata industrial space for lighter uses such as self-storage, bridal gown manufacture and coffee roasting – activities anticipated at 3333 Bridgeway Street, a six-storey project nestled in the shadow of the Viterra Inc. Cascadia grain terminal.
“Given that the largest plate is about 10,000 square feet of availability, we’re not going to see anything that is not a smaller user or several users,” said broker Chris Newton, senior vice-president with Cushman & Wakefield Ltd.
The project will have a total of 113,000 square feet, with Port retaining three floors for self-storage units. Studio and rehearsal space for the music industry is tipped for the second level. Design firms, food processors and other companies that want access to Highway 1 next door are also possible.
Holding steady
A glance at the latest investment statistics underscores a more sluggish pace of growth for non-residential construction activity in B.C., including industrial space.
Statistics Canada reports that overall investment in the sector rose 4% in the third quarter versus the previous quarter, led by a 6.6% increase in office investment. This offset a 2.5% drop in industrial investment. Metro Vancouver industrial investment was hit particularly hard, dropping 6.9%.
Overall non-residential investment in B.C. during the third quarter stood at $1.7 billion, with industrial construction representing $217.5 million – an increase of 32.5% from a year ago.
Meanwhile, the B.C. Ministry of Advanced Education, Skills and Training reports that in its latest Major Projects Inventory, manufacturing, transportation and warehousing projects held steady through the end of June 2018 with a combined value of $98.6 billion. This represented 24% of the province’s major projects by value. The largest project added to the inventory was the $100 million Walmart distribution centre planned for Surrey.
The number of proposed projects remains unchanged from December 2017 at 511, while projects under construction rose from 315 to 362 in the first six months of 2018. Projects on the go represent about a fifth of all projects in the inventory. •
