Shortage of industrial space pushing firms out of Vancouver

of industrial space — estimated at just over 1.8 billion squarefeetattheendof2017 — is being taken up at record speed in just about every urban market. And while more than 8.5 million square feet of additional space is currently under construction in Toronto and Vancouver, most of that is already committed to tenants.

In Vancouver, the demand has stretched the industrial property market to its limits. At 2.3 per cent, the rate of available industrial space is second only to Toronto where availability is the lowest in North America at 2.2 per cent.

“Both cities have shortages and both cities have rents that are going up but Vancouver’s situation is more dire,” said McCauley. “You can still go an hour outside Toronto and find options, whereas here, because of the geographical constraints, once you hit 45 minutesoutsidethecity,that’sit, you might as well go to Calgary.”

Some say an economic migration is already happening.

“I’m working for a client now that’s closing distribution centres in Vancouver so they can supply Western Canada from Alberta,” said Sean Ungemach, senior vicepresident at Cushman and Wakefield in Vancouver.

“Everyone is comparing the two markets and when they look at ours it’s very tight and it’s very expensive. So they just have to look elsewhere.”

The situation is particularly difficult for small and medium sized companies that lack the budgets to compete with global players. Vancouver rents are soaring, increasing 13.6 per cent to $10.23 a square foot in the final quarter of 2017 compared to the same period last year — making the city’s market the priciest in the country.

Toronto rents, by comparison, rose 8 per cent to $6.42 per square foot. Rents in Calgary, where availability ratessitat8.2percent,were $7.04attheendoflastyear.

Given geographical constraints, Vancouver has long had to balance the property requirements of residential, industrial and commercial interests. But the unprecedented demand and record absorption of land over the past number of years has made the task particularly onerous.

“There is a trade-off of course,” said Tom Davidoff, a real estate economist at the University of British Columbia. “I would normally say follow the market’s lead but because jobs do more for government coffers, you probably do want to have your thumb on the scale a little bit in favour of commercial uses, including industrial.”

A 2015 Metro Vancouver report found “a notable amount” of conversions of industriallandtootheruses had taken place between 2010 and 2015, resulting in a net reduction of 350 hectares.

“This conversion of land continues to reduce opportunities for industrial development and industrial business expansion, with economic, employment, and taxation implications for the Metro Vancouver region,” according to the report.

With so much demand for land to house and employ Vancouver’s growing population, British Columbia could consider releasing property from its Agricultural Land Reserve — a provincial zone protecting 4.6 million hectares of agriculturally suitable land across British Columbia, Davidoff added.

But pressure to convert the land has met with considerable resistance in the past.

“That would be the big provincial tool that’s available, but I haven’t heard much rumbling about that as an option,” he said.

With little space left in which to build out, warehouses in Vancouver may soon have nowhere to go but up, said Kyle Hanna, executive vice-president of industrial sales and leasing at CBRE.

“I believe Vancouver will be the first city in the Canadianmarkettoseeamultistorey warehouse,” he said.

Prologis, the world’s biggest warehouse owner, broke ground on a three-floor 580,000-square-foot warehouse just outside downtown Seattle last year — the first of its kind in the United States. for financial instruments globally.

Schwab,andseveralofits mutual funds, allege these banks, including JP Morgan Chase and Citibank, artificially suppressed the Libor rate between August 2007 and May 2010.

They are seeking damages in connection with US$665 billion in transactions involving floating-rate and fixed-rate debt instruments.

Royal Bank did not immediately respond to requests for comment.