Speculative builders continue to dominate Metro Vancouver's industrial market, accounting for 80 per cent of new construction in the second quarter of this year.
"The Vancouver industrial market is characterized by controlled development, limited supply and low vacancy," noted a study by Cushman & Wakefield. In 2010, all construction completions were in the suburban market, with 243,000 square feet added in the second quarter and almost 900,000 square feet started since January.
The strong speculative action "represents developers' optimistic outlook for the industrial market," the study said.
There is more than 1.9 million square feet of industrial space in development, of which almost 45 per cent is pre-leased, evidence that demand for industrial facilities in the region remains healthy.
Lease rates have shown signs of softening since the beginning of the year, with several submarkets experiencing a $0.25 to $0.75 per square foot decline in lease rates.
The market is witnessing improved demand for ownership in strata developments with a lag in demand for lease product. This is particularly true for the larger blocks of space of more than 50,000 square feet, Cushman & Wakefield reports.
Strata sales have picked up, with the investment volume reaching $121 million - more than double the figure posted in the first quarter. Commercial strata sales are not subject to B.C.'s harmonized sales tax.
from Western Investor, November 2010
