Demand for industrial facilities is arguably higher than ever in the Lower Mainland, but dwindling land availability in Metro Vancouver and the Fraser Valley means that nothing stays on the market for long.
“A lot of the remaining lands are considered ‘low lands,’ meaning they’re sitting by water and have [poor] soil conditions, but there’s adequate demand locally, so most of the projects we’re working on are sold out or leased before the projects are completed,” said Josh Gaglardi, principal of Orion Construction. “There are supply-side constraints and increasing regulatory requirements from the municipal, provincial and federal levels of government, and from the Agricultural Land Commission, which has many lands protected, so we’re seeing extended timelines to get through the city and bring new product to market. Each year, it seems to take longer and longer.”
Gaglardi’s observations are bolstered by a Q1 Colliers Canada report on the Vancouver industrial market in which it determined the vacancy rate is a record-low 1%. Consequently, rents rose by 7.5% year-over-year in the first quarter of the year to $14.09 psf, a record high.
Orion is developing Pacific Corporate Centre and Coastal Heights Distribution Centre, and at 443,000 sq ft and 427,000 sq ft, respectively, they could be among the last industrial developments of their size in the region due to the dearth of land.
“To create facilities that size, you need about 18-20 acres of land and we’re running out of opportunities for sites that size in the Lower Mainland,” said Gaglardi. “The complexity associated with the remaining land is with demand as high as it is, and supply as low as it is, we have to be creative in finding new sites and making them work, and that sometimes takes time.”
Some developers have indeed become creative. One of them is Wesbild, which, at six storeys, is building Canada’s largest stacked mixed-use industrial and office facilities in South Vancouver. Slated to begin construction early next year, Marine Landing will have units ranging from 600-34,000 sq ft, and depending on a business’s needs, up to three 300 sq ft units can be combined.
“Marine Landing is somewhat of a unique project in that it’s six storeys tall. One of the reasons we designed one is there’s a lack of land, which pushes land prices up, so in order to make it work we’ve pushed the height and the size of the building up,” said Wesbild’s SVP Lilian Arishkenoff. “What’s interesting about it is it’s a vertical expression of traditional industrial uses and, effectively, we’re pushing what are typically one or two levels of industrial up to the higher levels by providing services and components businesses would still need to function as industrial businesses, like freight elevators and ramps, and that allows people to establish their businesses on a higher level.”
Marine Landing’s unique layout could even abet business partnerships at the facility, added Arishkenoff.
“Our main mission statement is creating community and we will be able to do that within this project by bringing different folks together and allowing them to grow. They can also build equity because this is not a leasing project; people can come in and own units themselves—it’s strata. There are a number of amenities we’re providing to this project as well: we have a lounge, an area that can be booked for meetings, an amazing rooftop patio with spectacular views, a bike workshop, and a dog run. There will be a lot of opportunities for relationships amongst owner-operators who want to get together and create synergies.”