GVRD INDUSTRIAL REPORT SECOND QUARTER HIGHLIGHTS
GVRD’ S I NDUSTRIAL V ACANCY R ATE 1.30%
MARKET OVERVIEW
MARKET INDICATORS
•
•
IS
FROM LAST
QUARTER ’ S
T HERE
1.28% WAS
1,030,505
SQ . FT .
OF POSITIVE NET
British Columbia’s economy remains healthy this
•
Inflation fears have caused the Central Bank of
quarter with expected growth of 3.4% throughout
Canada to raise interests rates this summer. On
the next two years. BC’s escalating economy
July 10th the key interest rate was raised 0.25%
is
non-residential
to 4.5%. This has impacted affordability as well
construction and steady job growth. Evidence of
as demand for industrial properties. Furthermore,
this growth is in construction employment, which
industrial investors are becoming more security
has increased by 13.4% in the first four months of
conscious and are looking to safer investments.
2007 compared to the same period last year. The
If the Bank of Canada decides to further raise
province’s unemployment rate in May was 4.2%,
interest rates, Greater Vancouver may see more
and is predicted to fall to 4.1% by the end of this
industrial properties up for sale in the near future.
mainly
caused
by
strong
year and to 3.8% by the end of 2008.
ABSORPTION IN
2007
•
There are concerns that the soaring Canadian
In the first quarter of 2007, BC builders were granted
dollar will have a somewhat negative affect on the
$2.96 billion worth of building permits, an increase
Greater Vancouver industrial market. The dollar
MARKET INDICATORS:
of nearly 16% over the same period of 2006. $1.03
is at thirty year highs and has already impacted
billion of those permits were for commercial
exporting industries, most notably the forestry
buildings. Industrial building permits were up 81%
industry as exports were down 4.1% in February.
SECOND QUARTER 2007
in Greater Vancouver for January 2007 compared
However,
to 2006, reaching $8.5 million.
comprised of distribution oriented companies,
Q2 2007
BC’s
industrial
market
is
primarily
therefore, the number of businesses affected are anticipated to be minimal.
VACANCY GVRD Vacancy / Absorption / New Supply
Absorption
6
3.0% 2.5%
4
2.0% 3 1.5% 2
1.0%
1
* quarterly comparison
3.5%
Vacancy Rate
ABSORPTION
Vacancy rates
5
Square Feet (Millions)
NEW SUPPLY
New supply
0.5%
0
0.0%
00 20
01 20
02 20
03 20
04 20
05 20
06 007 2 20 D T Y
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GVRD INDUSTRIAL REPORT
SECOND QUARTER HIGHLIGHTS
MARKET TRENDS
remain for large industrial users, causing many to pursue space
•
on a built-to-suit basis.
Industrial developers are starting to build more large stratatitled, multi-tenant buildings. For larger tenants, developers will
The current supply of sale product is extremely limited with a number of buildings selling before reaching the market. Sales
sq.ft. to 15,000 sq.ft. bays, developers are filling the demand
occurring through unsolicited offers are much more common
with multi-unit strata buildings. This stratification process helps
as brokers increasingly present compelling offers directly to
the developer reach economies of scale as it is cost effective
building owners.
to build one large multi-tenant building than several smaller freestanding buildings. •
•
still build freestanding buildings, but for those who need 7,000
$6,934,000 SOLD - 5345 275TH STREET, LANGLEY
*
Purchasing a unit in a multi-bay building is cost effective for tenants. The total property assessment value on a freestanding building on a small parcel of property is usually greater than that of a strata unit in a multi-tenant building, thus saving the purchaser’s money on their taxes.
•
A niche in the market remains for freestanding industrial buildings that are roughly 20,000 sq.ft. One to two acre lots are extremely hard to find as developers are reluctant to subdivide their large parcels of land. As a result the price of existing 20,000 sq. ft. buildings is expected to escalate even further.
•
With the vacancy rate resting at 1.30%, very few existing options
*Data sourced from RealNet Canada Inc.
*
Top Ten Industrial Sales Q2 2007 Municipality
Size (sq.ft.)
Price
Price/ sq.ft.
2400 Boundary Road (Bridge Studios)
Burnaby
189,600
$40,100,000 (incl. sale of business)
$148
5345 275th Street
Langley
114,000
$6,934,000
$61
Weston Foods (Canada) Inc. (Canadian Investor)
Richmond
65,858
$5,700,000
$87
Carnarvon Properties Ltd. (Canadian Investor)
4141 Lougheed Highway
Burnaby
56,628 (lot)
$5,652,900
1781 West 75th Avenue
Vancouver
46,000
$5,400,000
9785 201st Street
Langley
317,117 (lot)
$5,323,399
3133 - 3145 Sumner Avenue
Burnaby
43,655
$5,050,000
$116
BC Turf Ltd. (Canadian Investor)
Maple Ridge
26,500
$4,636,000
$175
Simpson Strong - Tie Canada Ltd. (User)
6660 McMillan Way
Richmond
28,280
$3,850,000
$136
Farrell Estates Ltd. (Canadian Investor)
1645 East Kent Avenue North
Vancouver
32,000
$3,400,000
$106
KHI Capital Inc. (Canadian Investor)
Address
4693 & 4771 Vanguard Road
11442 & 11476 Kingston Street
Purchaser Larco (Canadian Investor)
Kysea Holdings Ltd. (Canadian Investor) $118
Alexandria Real Estate Equities (Foreign Investor) GE Modular Space (Canadian Investor)
VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo • Victoria
GVRD INDUSTRIAL REPORT
SECOND QUARTER HIGHLIGHTS
Top Five Industrial Leases Q2 2007 Address
Municipality
Size (sq.ft.)
Tenant
16133 Blundell Road
Richmond
484,000
Container World
880 Belgrave Way
Delta
162,330
Cancon Logistics Inc.
16000 Portside Road
Richmond
150,800
Simard Westlink Inc.
18351 McCartney Road
Richmond
125,000
Canadian Dry Storage
9975 199B Street
Surrey
86,454
TMS Transport
GVRD Statistics Q2 2007 Municipality
Inventory Dec ‘06
Burnaby
New Supply (sq.ft.) Jan-Mar ‘07 Apr-Jun ‘07 Q1 Q2
Vacancy Rates Jun ‘07 Jun ‘07 sq.ft. %
3 Months Net Absorption (sq.ft.) Apr-June 2007
24,784,864
220,000
224,279
245,275
0.99%
371,863
8,544,142
0
20,000
115,132
1.35%
2,421
Delta
20,647,632
83,000
0
421,294
2.04%
-164,330
Langley
13,913,780
30,000
411,462
275,062
1.98%
207,605
Maple Ridge
2,052,572
0
20,000
36,187
1.76%
-11,315
New Westminster
3,923,000
0
0
8,000
0.20%
14,209
North Vancouver
4,504,978
60,000
0
74,272
1.65%
41,597
Port Coquitlam
7,490,773
160,000
0
24,713
0.33%
38,287
Richmond
29,700,944
60,000
0
450,767
1.52%
385,850
Surrey
24,554,115
331,844
561,373
324,872
1.32%
-11,982
Vancouver
23,280,000
0
24,270
145,068
0.62%
156,300
163,396,800
944,844
1,261,384
2,120,642
1.30%
1,030,505
Coquitlam
Total
Historical Quarterly Comparison Quarters
Inventory
New Supply (sq.ft.)
Vacancy Rates sq.ft.
%
Absorption (sq.ft.)
Price of Land/ acre ($000)
Range of Rental Rates $/sq.ft./yr
Q1 2007
162,325,206
944,844
2,079,533
1.28%
2,233,421
$875 - $1,325
$7.00 - $10.50
Q4 2006
161,110,474
1,071,594
2,676,704
1.66%
421,538
$854 - $1,277
$6.80 - $10.00
Q3 2006
159,925,742
1,184,732
1,913,510
1.20%
2,163,947
$800 - $1,200
$6.50 - $9.75
Q2 2006
158,881,463
1,044,279
2,430,886
1.53%
1,632,353
N/A
N/A
Q1 2006
157,917,359
964,104
2,842,512
1.80%
1,155,014
N/A
N/A
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GVRD INDUSTRIAL REPORT SECOND QUARTER HIGHLIGHTS
LOOKING AHEAD •
with the vacancy number registering 1.30%. Despite the lack
The events of the summer months will be important for the Greater Vancouver industrial market. The Bank of Canada’s decision in regard to the current 0.25% increase in interest rates and future rate increases, and the surging Canadian dollar will likely play a key role in the supply and demand of industrial property.
•
2007
of available industrial space, lease rates may be peaking as tenants reach their current limit of affordability.
New large
bay buildings are coming on the market with shell rates in the $8.50 psf to $11.25 psf range. Tenants have typically looked to the suburbs for more affordable space, but with lease rates reaching as high as $8.25 psf in areas such as Surrey and up to $8.50 psf on Annacis Island, users may be pushing their
Vacant industrial space within the GVRD remains very scarce
maximum cost effective abilities.
GVRD INDUSTRIAL REGIONS
VACANCY RATES Q2 2007 0.62%
0.99%
1.32% 1.35%
1.52%
2.04% 0.33%
1.65% 1.98%
0.20% 1.76%
Burnaby Coquitlam Delta Langley Maple Ridge
North Vancouver Port Coquitlam Richmond Surrey Vancouver
Vancouver
Delta
Burnaby
Surrey/Langley
Richmond
North Shore
Coq./PoCo/NW
New Westminster
800 - 475 W EST G EORGIA S TREET , V ANCOUVER , B.C. V6B 4M9 P HONE : (604) 684-7117 • F AX : (604) 684-1017 V ISIT O UR W EBSITE : WWW . JJB . COM / VANCOUVER
FOR MORE INFORMATION, PLEASE CONTACT: KASIA HAJDUK CASEY BELL DIRECTOR OF RESEARCH RESEARCH ANALYST (604) 630-3405 (604) 630-3404 KASIA.HAJDUK@JJB.COM CASEY.BELL@JJB.COM
VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo • Victoria All information has been obtained from sources considered to be accurate but is not guaranteed and is subject to conditions at the time of any transaction taking place. Properties are submitted subject to prior sale or lease, withdrawal or changes without notice.