Metro Vancouver’s industrial market has reached a new record-low vacancy rate of 1.2% at the end of Q1 2019, amid ongoing strong demand and constrained land supply.
According to Avison Young’s Spring 2019 Metro Vancouver Industrial Overview study released late last week, this regional vacancy level was the lowest in Canada for the quarter.
This accompanied Vancouver’s industrial sales total going beyond $150 million in that quarter alone, hot on the heels of a record-setting $1.8 billion in investment last year.
Activity was even more pitched in eight out of 13 industrial markets in Metro Vancouver, with vacancy rates of less than 1% at the end of the quarter. The area’s strongest hubs were Maple Ridge/Pitt Meadows, New Westminster and Tsawwassen First Nation (TFN), all of which had vacancy rates of 0.1% or less.
Meanwhile, Richmond – with 37.7 million square feet of industrial space – registered the Metro’s highest vacancy rate (still low at 2.2%).
The prevailing trend is “the ravenous appetite for industrial real estate among tenants, owner-occupiers, developers as well as private and institutional investors to date in 2019,” Avison Young stated in its report.
“Developers remain unable to keep up with demand as industrial vacancy in Metro Vancouver has now remained at less than 2% for the past three years (and less than 1.5% through 2018) despite the addition of more than 10.2 million square feet in the past 36 months.”
“While construction of lease product is continuing by institutional investors seeking to hold assets long term as well as by those developers who acquired land at historical costs, the volume is unlikely to have much of an impact on vacancy,” Avison Young principal Garth White added.
“Much of this new lease supply is focused on large logistics/distribution users and is often preleased years in advance of completion. Small- to mid-sized industrial tenants are increasingly left with very limited options. Furthermore, we continue to see a shift in the development pipeline to strata projects, which will have significant consequences in the near future.”