CB Richard Ellis (CBRE) managing director Mark Renzoni described January as the busiest month for sales of Metro Vancouver industrial properties in several years while setting the stage for panellists at the recent breakfast of commercial real estate association NAIOP.
The activity follows a year in which sales transactions approached the peak reached in 2007, when 567 deals were completed. CBRE expects the number of deals done this year to approach 500 and top $700 million, up from 474 in 2010 valued at $680 million.
Strata sales have been a particularly strong element in the market, while the industrial land market is staging "a very slow and cautious level of improvement," Renzoni told his audience. Strata units are selling at from $115 to $130 per square foot.
Industrial vacancies are projected to dip from a year-end rate of 5.1 per cent region-wide to less than 5 per cent this year.
"We're not going to see a lot of supply, and cap rates are going to continue to compress," Darren Cannon, senior vice-president with Colliers International, told NAIOP members even as he acknowledged, "It's going to take a while to clean up this mess the leasing market is in right now."
While less-desirable assets may languish for a while, their time will come so long as demand for industrial product continues to be strong, said Rob Gritten, a principal with Avison Young. An ongoing supply of cash at 4.5 per cent to 4.65 per cent will help keep transactions moving, which will favour investors, he said.
"There are deals being done, and at prices higher than you might think they are being done at," Gritten said.
–- Peter Mitham/BIV
from Western Investor, March 2011
