Central Okanagan’s industrial vacancy rate increased 28% in the last year, thanks in large part to several new developments and caution from investors and business owners.
Kelowna’s metropolitan area has an industrial vacancy rate of 4.1%, according to Colliers' mid-2024 industrial market report. That number was as low as 1% four years ago, and even though the amount of development land that has sufficient accessibility and visibility remains scarce, prices have levelled off as well.
“Buyers are opting to hold off on purchases in anticipation of more suitable options coming to market,” the report stated. “This cautious approach is also due to the lending environment, interest rates, and costs of construction, which are leading buyers to delay purchases until more favourable market conditions emerge.”
West Kelowna’s increase was much greater than Kelowna’s, as it jumped from 0.3% in 2023 to 4.5% this year.
There is 483,000 square feet of space available in Kelowna and 73,000 free in West Kelowna.
The average asking net rent in the Kelowna area has remained level, at $16.78 per square foot, but building sales were strong in the first year, totalling $41 million.
The two largest industrial additions in the first six months of the year were Quail Ridge Business Centre and 220-250 Beaver Lake Road, which brought 263,000 square feet of space into the market.
Despite the vacancy rate increase and moderating lease costs, Colliers still views the Central Okanagan industrial real estate market as resilient.
“The market is shifting towards smaller, more adaptable industrial spaces, and while current conditions present challenges, the strong $41 million in building sales demonstrates ongoing investor and owner-user interest,” the report stated.
“As the market adjusts to these new economic conditions, opportunities for growth and strategic investment remain, suggesting a potentially positive outlook for the sector moving forward.”
The full Colliers report can be found here.
