Vancouver continued to move toward a post-industrial future as 2016 industrial building sales declined even while hitting a monetary record, according to a new Avison Young report.

The Winter 2017 Vancouver Industrial Report found Vancouver industrial building sales hit $192M in 2016 — the highest dollar volume on record for the city. Yet that value was based on 43 sales, which was the lowest number of deals completed since 2009.

Industrial sales in 2017 through Sept. 30 have totaled 35 deals valued at $88.5M, the vast majority of which comprise the sale of cheaper, smaller strata units, which share common space.

“While land prices seem to be starting to stabilize at new highs, rental rates and building pricing are expected to continue to strengthen,” Avison Young Vancouver Vice President Kevin Kassautzki said in a news release.

“Vacancy will remain tight with limited relief expected through new construction, as most new projects are likely to feature strata units, which are usually needed to make the pro forma work with these new high land costs in the market,” he said.

The report said Vancouver’s lack of industrial space — it had a vacancy rate of 1.6% in Q3 — has been hurt even more by amended industrial zoning bylaws and community plans. These have triggered the acquisition of industrial properties by investors and developers with an eye to redevelopment.

“It is becoming increasingly difficult to distinguish whether a property was acquired for its value as an industrial building or as land for redevelopment,” notes the report, which expects strata unit sales will lead to an increase in the number of industrial deals in Vancouver in 2017 and 2018.

And just who is buying industrial land is also changing in Vancouver.

“While owner-occupiers have traditionally played an active role in Vancouver’s industrial market, the purchaser profile of freestanding industrial buildings has shifted in the past 18 months to include many more investors and developers,” Avison Young principal Russ Bougie said.

“Owner-occupiers are now largely relegated to acquiring strata units (or relocating to another market or shutting down their business entirely) as rapidly rising prices for freestanding industrial assets have priced many business owners out of the market,” he said.