Record high for Vancouver industrial sector amid ‘unrealistic’ boom
Limited inventory driving commercial real estate
Steve Randall
Canadian Real Estate Wealth
Vancouver’s industrial real estate sector is seeing some overinflated values as limited inventory is in demand from developers and investors.
The market conditions mean that traditional owner-occupiers in the sector are being left on the sidelines for freestanding buildings and were mainly buying strata units in 2018.
Avison Young says that despite recording the second-fewest deals (47) completed in a year since 2010, Vancouver industrial dollar volume hit a new record of $295.6 million in 2018 – far surpassing the previous dollar volume record of $201 million set in 2017.
“This year we are seeing many examples of hugely inflated assessed values exceeding current market value, creating some unrealistic vendor expectations,” comments Avison Young Principal Russ Bougie who focuses on industrial sales and leasing transactions.
Three key deals made up a significant portion of the dollar volume in 2018: the sales of Main Industrial Park ($43.17 million), 8351& 8365 Ontario Street ($29.25 million) and 1691 West 75th Avenue ($23 million), all of which were acquired by private investors/developers for a total consideration of $95.42 million (or 32% of the total).
Leasing activity to remain subdued “Industrial leasing activity has slowed with vacancy at 1.4% at year-end 2018 and there is limited new space for lease in the development pipeline,” says Avison Young Principal Kevin Kassautzki who focuses on industrial sales and leasing in Vancouver. “Rising rental rates combined with few available options in older buildings will continue to limit leasing activity in 2019.”
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