One of the industry storylines to follow in this market through 2014 will be how stakeholders and levels of government will respond to the region’s shortage of industry land. (Our idea of a rock-paper-scissor tournament to decide land holdings was laughed out of the city council office.)
According to a NAIOP study, the squeeze really comes to the forefront 7 to 9 years from now. (Hear that, scientists? You have six years to build a shrink ray, if you want a whole year to test it properly.) One of the authors of the study, CBRE’s Chris MacCauley, says it’s also important to keep the situation in the Lower Mainland in perspective—despite the squeeze, there still are options for companies looking for industrial space. That’s what makes the Apps Cargo Terminals Inc lease deal to take 110k SF in Boundary Bay Industrial Park in Delta so noteworthy. Apps took the space in the first building of the Boundary Bay project, located within minutes of the Delta Container Port, directed off HWY 99, alongside the new South Fraser Perimeter Road.
Snapped is an up-to-date shot of construction at Boundary Bay. Brokerages like CBRE obviously have a vested interest to educate companies on the Lower Mainland and the opportunities for industrial space that exist in the area, as opposed to seeing those companies pull up their socks and head to Calgary, or Winnipeg, where there’s more space available. (As long as they don't lose their loyalty to our beloved Canucks.) Boundary Bay’s two buildings (each 440k SF) will have industry-leading 36-foot ceilings. Occupancy is scheduled for April. Watching the absorption rate as the project is completed will be interesting to watch, Chris adds.
The reality for companies that want to set up shop in the Lower Mainland is daunting—as Chris says, best-case scenario for new builds is a timeline of 18 months, factoring in the time it takes to find land to build on, time to get development permits from the municipalities, site preparation, then construction. It’s usually a 24-month process, where in Calgary, it’s closer to 12 to 14 months. Still, the Vancouver-area market did over $1B in industrial sales in 2013.
“It’s healthy,” Chris says. “There’s a lot of private capital in Vancouver.” For people in the business, walking the line between raising red flags about the upcoming crunch in industrial land for development, while not scaring off companies wanting to set up shop here, will continue to be a precarious one, Chris says. The objective is to give all the stakeholders the facts. “We aren’t looking to pave over all of Vancouver and make it warehouses,” he says. (Though that would certainly ease some traffic and the lines at the coffee shop would go way down.) But there needs to be better planning around all the infrastructure projects to accommodate growth in the market, he adds.
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