A shortage of industrial real estate and soaring demand will drive the average price of industrial land in Metro Vancouver to more than $7 million this year, according to a national study of the commercial real estate market by CBRE, released on March 1.
“The lack of industrial land across Vancouver has driven significant land price growth in recent years and this trend is expected to continue going forward. The market’s average land price figure is expected to increase by 17.5 per cent and reach a new record $7.05 million per acre in 2022,” the 2022 Canada Real Estate Market Outlook states.
Development will also be pushed further afield to submarkets such as Chilliwack, Abbotsford, Maple Ridge, and Mission, according to CBRE, a leading commercial real estate agency.
Metro Vancouver demand, driven largely by e-commerce and logistics requirements, will cause the industrial market to tighten further in 2022, CBRE forecasts.
Development has ramped up considerably, but 79.2 per cent of the record 9.4 million square feet that is under construction in Metro Vancouver had already been pre-leased as of year-end 2021, the report notes.
The continued supply-demand imbalance is forecast to drive vacancy rates to new lows of 0.7 per cent, while lease rates are expected to increase upwards of 13.5 per cent in 2022.
For strata industrial sales, the average price per square foot is forecast to reach $590 this year, up from $390 per square foot just two years ago.
The CBRE land price projections appear right on the money.
On January 12, CBRE’s Vancouver office sold an 8.9-acre industrial site ay 9800 Van Horne Way, Richmond, for $60.5 million, or $6.73 million per acre.
The most recent major sale of an industrial property, announced March 2, was the transaction of 13.9 acres at 7233 Progress Way, Delta, for $82.68 million, the equivalent of $5.94 million per acre.
Toyota Canada, the vendor, sold the site, which includes 267,000 square feet of manufacturing and warehouse space, to developer Beedie in an off-market, bid-process deal through JLL Canada, Vancouver. JLL brokers were executive vice-president Bruno Fiorvento and vice-president Baktash Kasra.
Toyota will vacate the Tilbury Industrial Park site in the second quarter of this year, according to JLL.