The developer of an 89-acre historic industrial site in Coquitlam is attempting to jettison warehouses and workspace in favour of 1,000 more condos, though an industrial shortage is driving prices to record highs.
Coquitlam’s industrial vacancy rate is 1.6%, which is up from a record low of 0.5% a year ago, according to commercial agency Avison Young.
Industrial lease rates have shot up to an average of $11.07 per square foot, third-highest in Metro Vancouver. Scarce industrial sites are topping $1.2 million per acre.
Industrial tenants had looked to the development of 800,000 square feet at the former Fraser Mills sawmill, which would represent 10% of the city’s total industrial inventory.
But developer Beedie Development has submitted a revised proposal to Coquitlam council that cuts 30% of industrial on the waterfront site.
The company’s plans, which have yet to receive all of the required council approvals, are substantially different from 2008 when it first gained approval for the redevelopment.
The developer wants to add 1,000 more residential units to the 3,400 to 3,700 units currently approved, which would mean increasing the number of towers from 10 to 15.
At least one would be 41 storeys, compared with a maximum of 12 floors under the original plan. Beedie also apparently plans to speed development by cutting the construction phases from 16 to nine.
Fraser Mills industrial space would be reduced by 252,000 square feet.
If approved next year, it would be built out over the next decade, according to Beedie.
Ryan Beedie, president of Beedie Living, said the changes will make the development “more economically viable.”
Currently, new highrise condominiums in Coquitlam are selling for north of $750 per square foot.
Beedie Living itself has experienced Coquitlam’s white-hot industrial demand.
It has two speculative industrial buildings underway for lease at Fraser Mills and a third being custom-built for AG Hair, a Burnaby cosmetic maker that ships product around the world.
There has been a “ton of interest” for leasing the remaining 120,000 square feet, said leasing agent Greg Lane of Colliers International.
Beedie is considering only tenant applications that match a specific profile.
“We are taking our time,” Lane said. “We want to have job creation, such as clean manufacturing.”
The limited industrial space in Coquitlam has also spurred strata speculation. Teck Construction LLP sold out all 27 units of its spec play at Coquitlam’s Nicola Avenue Business Park this year before the shovels even hit the ground. The 68,700-square-foot complex opens this spring.
Strata industrial space in Coquitlam sells for around $280 per square foot.
Fraser Mills was once was a large, heavy-industrial site but residential will mostly swallow it up.
That’s worrisome, said Michael Hind, CEO of the Tri-Cities Chamber of Commerce. “We’ve exhausted all industrial land in Coquitlam.”
Hind said other than a 120-acre parcel of land in Port Coquitlam being developed by the Kwikwetlem First Nation there’s not much industrial land to be had anywhere in the Tri-Cities, which includes Coquitlam.
David Munro, Coquitlam’s economic development officer, agreed there’s a lack of industrial but he said the city is also creating opportunities for businesses fleeing even higher rental rates or property prices closer to Vancouver.
“Yes, we are losing businesses, but there’s other businesses that are coming in and taking up those spaces,” Munro said.
The Fraser Mills changes require adjustments to Coquitlam’s official community plan and zoning bylaws and public consultation, which would likely not finish until at least mid-year 2018, said James McIntyre, the city’s general manager for planning and development.