The scarcity of industrial parcels in the Lower Mainland means that First Nations and the Port of Vancouver hold most of the land needed to meet future demand for warehouses and distribution centres, according to survey by Avison Young.
Most of the existing quality industrial product is utilized, and with a limited amount of new construction being rapidly absorbed by the marketplace in most municipalities, “there is a sense that a seismic shift in the industrial landscape is approaching,” the company’s Spring 2012 Metro Vancouver Industrial Overview states.
“ There is virtually no ready-to-build and well-located land in the region for the next-generation warehousing and distribution space envisioned as necessary by the public and private sectors to leverage ongoing port and transportation infrastructure investments,” comments Avison Young associate Michael Farrell. “With all levels of government collectively investing billions of dollars in the Pacific Gateway, part of the mandate of Port Metro Vancouver is to ensure that the resultant demand for industrial land is met.”
There are very few developers who hold industrial land parcels large enough to accommodate the necessary large-scale distribution and warehousing facilities, the report warns.
“Many of the very few parcels capable of accommodating large floorplate facilities are constrained by a wide range of factors, including prohibitive land cost and restrictive land use policies,” said Avison Young industrial associate Ryan Kerr.
There is a dawning realization that leasehold land held by Port Metro Vancouver (PMV) and the Tsawwassen First Nation (TFN) will be a significant source of industrial land for development in the years to come, Kerr says. Two recent significant industrial transactions in Richmond involved leasehold land.
“It should be noted PMV and TFN do not compete in the same market as private landowners and investors who require a yield based on cost, including freehold land value,” he adds. “PMV, and to a lesser extent, the TFN, can underwrite the capital value of the land at a rate allowing for the development of the land based on broader principles than just economic yield.”
