With the current pace of demand, Vancouver could “literally run out” of land for industrial properties by the next decade, CBRE Ltd. warned.
The brokerage cited e-commerce as a major factor that massively boosted demand for Vancouver’s warehouse space, which has spurred industrial rent rates upward by 16% to reach a historic $11.86 per square foot in 2018 – indeed, Canada’s highest for that year.
“There is a critical shortage of industrial land in Vancouver,” CBRE Canada vice chairman Paul Morassutti told Bloomberg.
The city’s industrial buildings might begin to “go vertical” due to the lack of usable land, Morassutti added.
“It was our estimation that they could potentially, literally run out of industrial land by the early 2020s.”
Read more: Industrial spaces are Vancouver’s most desired commercial assets
These supply issues, along with a 4-decade low in unemployment rates, will continue stimulating demand in the sector for much of 2019, according to the findings of an Avison Young Canada Inc. report released earlier this year.
Nationwide industrial vacancies declined to a record low of 2.9% near the end of 2018. Vacancy levels in Canada’s hottest markets – Toronto with a 1.3% rate, and Vancouver with a 1.5% level – were by far the lowest in North America.
Industrial space also represented more than 20 million sq. ft. in construction last year, markedly above than the 14 million sq. ft. in 2017.