Industrial land squeeze pushes Metro Vancouver to North America's lowest vacancy rate
Razor-thin industrial vacancy in the region pushes up land values, lease rates and makes business a tougher prospect.
DERRICK PENNER | Vancouver Sun | Updated: May 8, 2019
The Ironworks building, an example of multi-level industrial space instead of flat warehouses as Metro Vancouver surpasses Toronto to have the lowest industrial vacancy rate in Canada, putting a severe squeeze on the city for future development, in Vancouver, BC., May 8, 2019. NICK PROCAYLO / PNG
For Metro Vancouver, winning the race to the lowest industrial-land vacancy rate in North America isn’t an enviable accolade, instead it’s pushing the region closer to crisis mode.
Metro has surpassed Toronto, with an industrial vacancy rate of 1.2 per cent versus 1.5 per cent, according to a new report from Avison Young, which pushes up land values and lease rates in addition to making it incredibly difficult for businesses that want to land here or expand.
“It’s not good for local business, that’s for sure,” said Russ Bougie, an Avison Young principal in its industrial department. “It does not help support growth.”
Inside Vancouver itself, the soaring industrial property values that come with shrinking vacancies are creating an affordability crisis for businesses, said Pietra Basilij, manager of industrial initiatives for the Vancouver Economic Commission (VEC).
“It’s the last two or three years that we’ve really seen that big shift,” Basilij said, where industrial property values have shot up 50 per cent per year on average, particularly in central districts such as Mount Pleasant and the False Creek Flats.
And with many businesses there in the middle of three- or five-year leases, Basilij said the VEC is still bracing for the full impact of soaring land values, lease rates and corresponding taxes.
Commercial realtor CBRE Group Inc. reported last August that Vancouver lease rates were up 29 per cent, year-over-year, compared with a three-per-cent increase globally.
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