Greater Victoria’s industrial real estate market has tightened to a vacancy rate of 0.6 per cent, the lowest in more than a decade.
Colliers International vice-president Ty Whittaker said the tightening market reflects a strong economy, adding the demand surge might have caught developers and landowners off guard.
“I think it may be a case where people haven’t realized the amount of demand that there has been,” he said. “It may not be a lack of planning, but there may have been a lack of aggressiveness from developers seeing there is an opportunity to service the industrial market.”
The report points out that just 44,000 square feet of industrial land added was to the marketplace over the last year, while 142,000 square feet of space was swallowed up by businesses looking to establish themselves or expand.
Whittaker said growth is difficult when there’s so little available land, saying if someone were looking for 5,000 square feet of space, there might be only a few options in the entire region.
“That’s not good for businesses that need to grow and want to grow,” he said.
Whittaker said there has been an interesting shift in thinking about the West Shore over the past few years because of the scarcity of land. “Now people are preparing to move their businesses to the West Shore because that’s where their employees now live.”
The trouble is there’s no available industrial land out there, either. The report notes the West Shore’s current vacancy rate is 0 per cent, down from 1.6 per cent in the second quarter of 2018. In fact, the only part of the region that has a vacancy rate above 1 per cent is Central Saanich at 2 per cent.
An expected 300,000 square feet of industrial land should be coming onto the market in the next 12 to 18 months on the West Shore, and another 100,000 square feet is planned for North Saanich.
The high demand and lack of supply are driving up prices.
According to Colliers’ report, the average asking rent is $15 per square foot, a 15.4 per cent increase from the same time last year.