Demand high in rental housing, industrial property sectors

Metro Vancouver’s rental housing and industrial markets remain highly active, with demand outstripping supply on both fronts, leading to sales and price surges in some areas and low vacancy rates in others, according to recent reports.

CBRE’s Q4 market review of Metro Vancouver’s industrial real estate sector showed that the region saw industrial leasing space vacancy rates drop to 2.4 per cent at the end of last year, the lowest level since 2007. Sales, meanwhile, reached a record $1.2 billion in 2016, up nine per cent from the previous year.

The average property price was up 13 per cent, hitting $195 per square foot in Metro Vancouver, and industrial land prices saw their largest increases in a single year. All this despite “an apparent lack of properties available for sale,” the report said, with only 312 acres of industrial land trading hands in 2016.

“It’s definitely been the trend in the last three years that demand has outpaced supply almost twoto-one,” said Chris MacCauley, CBRE’s senior vice-president (industrial and logistics). “It’s something that has no easy fix; it will take some long-term planning throughout Metro Vancouver to find out what are the right places for industrial land of various uses.”

The CBRE report called the depletion of Metro Vancouver’s industrial land “critical,” noting Vancouver, Burnaby and Richmond all have less than 10 years of supply left.

“About 50 per cent of the supply coming on this year (in Metro Vancouver) is already spoken for, and it’s January,” MacCauley said, adding that clients looking at Vancouver have been driven out to Surrey and Delta because of lack of availability. Surrey has 30 per cent of Metro Vancouver’s future land supply, MacCauley noted.

On the rental side, the Goodman Report on Metro Vancouver’s apartment sector showed the average price per suite in 2016 jumped 52 per cent to $377,000. Authors David and Mark Goodman of HQ Commercial added that, while 9,470 purpose-built rental units are either proposed, approved or under construction throughout the Lower Mainland, demand will continue to far outstrip supply.

“It’s anticipated that the regional population will increase by an average of 35,000 per year until 2040,” the report said.