Though Vancouver's industrial market cooled slightly during the second quarter, its performance since the beginning of 2017 has made it one of the hottest industrial markets in the world this year, according to CBRE data.
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Industrial property rent growth worldwide averaged 3.2% between Q1 2017 and Q1 2018, CBRE reports. Rental growth in the Americas was a bit higher, up 3.8% for the same period.
Those growth rates are tepid compared to Vancouver's rental growth during the same period. Industrial rents in the metro spiked 29.1%, besting every other market globally. That includes red-hot industrial markets such as Budapest (up 11.1% for the same period), Oakland (up 14%) and Beijing (up 19.8%).
During Q2, Vancouver industrial rents were up 6.3% quarter over quarter, and up 33.5% since the beginning of 2017.
"These rising lease rates [in Vancouver] really speak to the strength of the economy — the growth in population, consumer spending," CBRE Vancouver Vice President Jason Kiselbach told Bloomberg.
Strong demand from the likes of Amazon is driving demand for industrial space in places like Vancouver, a dynamic that's driving up rents and pushing vacancy rates down.
Also according to CBRE, metro Vancouver's industrial vacancy rate stood at a very low 1.6% during Q1, and then went down even more in Q2, to 1.5%, which is an all-time record low.
"High demand coupled with lack of existing Tier 1 product is also leading to increased activity on space currently under construction," the Q2 CBRE report said. "[That is] often leading to developments being nearly completely absorbed prior to construction completion."
According to an Avison Young report late last year, Vancouver’s lack of industrial space has been exacerbated by amended industrial zoning bylaws and community plans. They have triggered the acquisition of industrial properties by investors and developers with an eye on redevelopment.
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