Metro Vancouver is paying the cost for its industrial land shortage as low vacancies persist and prices keep rising, says the Greater Vancouver Board of Trade (GVBOT).
Roughly 5.1 million square feet of industrial space has been lost to Calgary over the last 4.5 years, according to a Sept. 13 report commissioned by the GVBOT alongside commercial real estate association NAIOP Vancouver.
That figure is based on an assessment of companies that actively sought space in the region but chose to invest and locate in Calgary.
The result is an estimated loss of 6,300 direct jobs, $477 million in wages and nearly $500 million in gross domestic product.
“For years, many businesses and market commentators were forecasting that we would have a crisis of industrial land similar to our housing crisis. The data demonstrates that we have passed the tipping point and are now at a critical juncture,” the report said.
Metro Vancouver’s growing population has resulted in a higher demand for goods and infrastructure that supports e-commerce. Though more than 36 million square feet of industrial space has been added over the last 10 years, this has not kept pace with demand, according to the report.
“Due to a lack of available land and a complex regulatory system, land prices have more than tripled in five years, causing businesses and thousands of family-supporting jobs to be shipped to Calgary and other cities,” said Bridgitte Anderson, president and CEO of the GVBOT, in a news release.
Metro Vancouver’s most recent vacancy rate stands at 0.6 per cent and its availability rate stands at 1.7 per cent, according to a second quarter report from commercial real estate company Colliers. Rent per square foot has remained steady throughout 2023 at roughly $22.05.
Meanwhile, the average rent per square foot in Calgary is approximately $16, with a vacancy rate of 1.8 per cent and an availability rate of eight per cent, according to the report.
Though Metro Vancouver’s industrial land makes up 4 per cent of the region’s total land mass, it accounts for over 450,000 direct and indirect jobs, $50.1 billion in GDP and an overall output of $92.5 billion, according to the report.
Industrial land generates 27 per cent of jobs the region. Those that are located on these lands pay an average of 10 per cent higher than the national average wage.
The report estimates that for every one per cent increase of available industrial land for jobs and production, the result will be an additional 126,100 jobs created and $12.2 billion in GDP generated for the province.
“To build a balanced and prosperous economy, we need a refreshed approach to land use that prioritizes the policies needed to deliver more local housing, local food and more local jobs and production,” said Anderson.
The two organizations suggest solutions such as re-focusing regional land-use planning, increasing protection and availability of industrial land in the region, and revising regional land-use plans every three years.
“With the critical shortage of industrial zoned and serviced land, we have lost industrial businesses and the accompanying economic benefits to other regions and this trend will continue unless all three levels of government make an effort to address the issue,” NAIOP Vancouver said in a release.