WAREHOUSES I Vacancy rates for industrial spaces have been steadily declining
Fiona Anderson
Sun
Commercial tenants in the Greater Vancouver area are having an increasingly difficult time finding rental space, and are being forced to pay top dollar to get it, according to three recent reports.
Greater Vancouver is the toughest place in Canada to find large warehouse space, according to a report by CB Richard Ellis.
A company looking for space of more than 9,290 square metres (100,000 square feet), common for distribution centres, only has two options in the region, the report states. The same tenant could have its pick of nine properties in Calgary, and 74 to choose from in Toronto, the most accessible city of the six surveyed.
The vacancy rate for industrial spaces of all sizes was up slightly to 1.8 per cent in Greater Vancouver during the first quarter of 2006. But vacancy rates have been on a steady decline since the beginning of 2004, according to the report.
Record levels of new supply between January and March, which added 69,211 square metres (745,000 square feet) of industrial space — 25 per cent more than any other three-month period in the last three years — helped keep vacancy rates from tightening further.
But while some new projects are expected to be completed by early 2007, Statistics Canada reported earlier this month that investment in industrial building construction fell 9.9 per cent in the province during the first quarter of the year, the sharpest drop in the country.
Continued pressure on industrial rental property has led to record-high rents of $7.28 per square foot, up 12 per cent in the past 12 months, CB Richard Ellis reported.
Meanwhile, office space continued to tighten in the Vancouver area as well. In the downtown core, the vacancy rate fell to 5.7 per cent in the first three months of the year, down from 6.9 per cent at the end of December, according to a report by Barclay Street Real Estate.
The total amount of vacant downtown office space is at its lowest in five years, the Barclay report said.
“Companies relocating and/or expanding have driven the large amount of leasing activity we’ve seen the last year-and-a-half, and while the economic outlook and job-creation forecasts for British Columbia continue to be positive, with decreased vacancy and no new supply coming on-line after Bentall 5 is completed, there are fewer options for companies looking to expand or locate a new office downtown,” the Barclay report said.
Rents have increased 20 to 25 per cent during the past year-and-a-half, but that comes on top of depressed historical rates, the report said.
“Thus, even after a $5-per- square-foot rent increase … Vancouver downtown office rents are a relative bargain when compared to the price of virtually anything else on a company expense statement,” the Barclay report said.
CBRE also surveyed office space in downtown Vancouver and the Greater Vancouver area. It found the vacancy rate for downtown to be 7.3 per cent, down from 7.8 per cent in the fourth quarter of 2005. Differences between the CBRE and Barclay reports may be due to differing geographical boundaries and buildings covered.
Across Greater Vancouver, the vacancy rate dropped to 9.3 per cent, the lowest level in four years, the CBRE report found.
The report blamed increased construction and land costs with keeping supply low. However, increased rental rates were “now approaching the level necessary to stimulate development activity.”
RUNNING OUT OF OPTIONS
Here is how Canada’s major markets stack up in terms of available industrial space over 9,290 square metres (100,000 square feet).
Vancouver: 2 options
Calgary: 9 options
Edmonton: 7 options
Toronto: 74 options
Montreal: 51 options
Source: CB Richard Ellis
SURREY FEELS THE BIG SQUEEZE
Looking for industrial space?
Maple Ridge appears to be the best best in Greater Vancouver, but things are awfully tight in Surrey.
Industrial vacancy rates
Surrey: 1.0%
Vancouver: 1.5%
Delta: 1.6%
North Vancouver: 1.8%
Burnaby: 1.9%
Langley: 2.0%
Tri-Cities: 2.0%
Richmond: 2.2%
Abbotsford: 2.5%
Maple Ridge: 3.7%
Greater Vancouver: 1.8%
Source: CB Richard Ellis
© The Vancouver Sun 2006