Vancouver’s bustling economy could soon come to a grinding halt if something isn’t done about the region’s dwindling supply of industrial land.
This according to the city’s industrial land experts, who say municipal, regional and provincial decision-makers need to work with the business community to develop a system to protect and increase Metro Vancouver’s jobs land base before it disappears.
During a recent Vancouver Board of Trade address, Port Metro Vancouver president and CEO Robin Silvester sounded the alarm bells about the impact on the local economy if industrial land is not protected soon.
The worst-case scenario, he said, is that Metro Vancouver would be turned into a “local fortress” reliant on regional instead of global economic ties.
“It starts to play out to Vancouver no longer being an international city, Vancouver no longer being a full economy,” Silvester told Business in Vancouver.
“You start to think of big communities in Florida that are just retirement communities. I don’t think that’s what Vancouver wants to be, but that’s a possible consequence.”
Metro Vancouver’s industrial land base totals 28,246 acres, and employs approximately 235,000 people in transportation, warehousing, manufacturing, construction and other sectors.
But more than three-quarters of that land has already been developed, and big questions are being asked about how much of the remaining undeveloped land (6,634 acres) is usable.
Long-time Vancouver real estate industry insider Bob Laurie believes the region has far less usable industrial land than Metro Vancouver outlined in its 2010 industrial lands inventory, which was published in November.
The problem, he said, is that the document outlines the amount and location of undeveloped industrial land but not whether it’s zoned, serviced, subdivided or even marketable.
That presents a problem for the port and the provincial government, which both want Vancouver to become Canada’s economic gateway.
In order for that gateway to work, however, land is needed for logistics business to effectively move goods.
But a significant chunk of Metro Vancouver’s available industrial land is south of the Fraser River in Surrey and Langley or in the far northern reaches of Maple Ridge.
“Fundamentally put, port development requires access to water,” said Laurie.
“So let’s use industrial development in South Surrey; sure you might have land there but it’s not connected to water – you have nothing.”
Eric Trygg, a private developer, said the industrial land market in the Fraser Valley is far more constrained than people think.
“With the exception of Campbell Heights, there’s less than a year’s supply anywhere in the valley that I know of,” said Trygg.
Bill Hobbs, vice-president industrial at Cushman & Wakefield in Vancouver, agreed.
“If you’re looking for a five-acre or 10-acre parcel in the Fraser Valley, it’s on one hand that you’d be able to [count] serviced and zoned properties … it’s frighteningly tight.”
In addition to constraining port and gateway development, the lack of industrial land also drives away businesses that would otherwise set up shop here.
“Bottom line is, it’s a cost disadvantage,” said Hobbs.
Last fall, commercial real estate broker Avison Young pointed out in an industrial overview report that the “overall lack of supply” in the market has restrained “deal and dollar volumes throughout the region despite high demand.”
The lack of supply has also kept prices high for years.
Vancouver had the highest baseline cost per acre for industrial land in Canada, according to a Site Selection industrial index from before the financial crash in 2008. Prices per acre in Vancouver ranged between US$500,000 and US$1.2 million four years ago.
That’s compared with the city’s nearest Canadian competitor, Calgary, where land in 2008 ranged between US$350,000 and US$1 million per acre.
The cost disadvantage for Vancouver is even worse south of the border.
In Seattle, the price per acre of industrial land ranged between US$330,000 and US$480,000 in 2008.
“If it costs more to rent a warehouse or for a piece of dirt, how does that put us into step with people who are literally 10 kilometres across the line in the U.S.?” Hobbs pointed out.
For its part, Metro Vancouver is working to determine just how much of the region’s undeveloped industrial land is marketable.
Christina DeMarco, a division manager for regional development at Metro Vancouver, said the issue is a significant concern for her organization.
An industrial lands working group has been assembled to sort through these issues, she said, and Metro Vancouver has asked each municipality for details about the readiness and marketability of each parcel of undeveloped land.
That information will be filed to Metro Vancouver in the next two months, DeMarco said, at which point a clearer picture of the region’s industrial base will be available.
Metro Vancouver has also implemented a “check-in” policy in the new regional growth strategy so that municipalities can’t re-zone industrial land for other uses, such as condominium development, without regional approval.
“I think there was good buy-in from the municipalities once they understood how they were collectively protecting parts of that land base,” DeMarco said.
Still, Silvester maintains that more needs to be done to protect the land that will support the jobs of the future, and a possible discussion point might be the creation of a jobs land reserve similar to the way the Agricultural Land Reserve protects farmland.
Said Silvester: “Maybe we need to be having the bigger conversations about a jobs land reserve, about the long-term needs to preserve land for the economy to grow in the Lower Mainland.” •
