Vancouver’s industrial real estate supply remains tight, putting upward pressure on prices, according to Avison Young’s winter and spring industrial report.
The commercial real estate firm said that an improved debt market and rosier economic forecast is spurring demand for industrial land in Vancouver.
As well, some businesses are making expansion a priority to take advantage of reduced lending criteria and low interest rates.
Constricted availability and high land prices are reportedly encouraging demand for strata development.
With the average selling price per square foot remaining above $200 since 2007, many owner-users appear to prefer strata ownership to leasing, said Avison Young in its report.
Approximately $78.2 million worth of industrial land deals were completed in 2010, compared with $33.9 million in 2009.
There were 46 transactions in 2010 versus 36 the year prior, according to RealNet Canada.
Vacancies rose to 3.5% in the fall and winter of 2010 from 2.6% six months earlier.
Avison Young said demand for strata-titled industrial buildings will remain strong as long as the cost of debt remains relatively low and land costs high.
Strata deals represented 38% of total industrial land sales in Vancouver in 2010 and made up 42% of industrial land sales in 2009 and 32% in 2008.
Avison Young’s report said that it will be challenging to find sites in Vancouver for any form of industrial development, strata or otherwise.
Leasing activity is increasing, but softness remains in rental rates, as some tenants move and as other renters downsize or leave the market.
In the last half of 2010, decorative plumbing and hardware distributor Cantu Bathrooms and Hardware Ltd. leased one of the largest spaces available in the Vancouver market, a 40,600-square-foot space at 8351 Ontario St.
The largest industrial land deal in the second half of 2010 was a 115,929-square-foot warehouse on Parker Street that sold for $7.1 million.
The second largest deal was the $5-million sale of a 32,265-square-foot office and manufacturing facility at 116-144 East 7th Ave.