Amid slower leasing activity, the growth of Vancouver’s industrial property sales values is picking up speed, according to an analysis by Avison Young.
In its new Spring 2019 Vancouver Industrial Report, Avison Young noted that the steady upswing in the city’s industrial real estate prices is pushing out users, with the ensuing mad scramble by developers and investors identified as the primary cause.
“While sales volume is down, pricing continues to rise amid continuing strong demand from owner-occupiers,” Avison Young explained.
“Dollar volume from Vancouver industrial sales continued to rise in 2018 as the number of deals completed declined with investors and developers increasingly challenging the historical dominance of owner-occupiers in terms of transactional volume.”
Vancouver’s industrial dollar volume reached a historic high of $295.6 million, far above the previous record of $201 million back in 2017. This is despite the market seeing the second lowest number of completed transactions (47 deals) in a year since 2010.
Earlier this year, CBRE Ltd. warned that at the current pace of activity, Vancouver’s supply of industrial land will be virtually depleted by the next decade, with the burgeoning e-commerce sector cited as the main factor driving demand.
“There is a critical shortage of industrial land in Vancouver,” CBRE Canada vice chairman Paul Morassutti told Bloomberg. “It was our estimation that they could potentially, literally run out of industrial land by the early 2020s.”
Future industrial buildings in the city might also begin to “go vertical” due to the lack of usable land, Morassutti added.