Lease rates have gone up in Vancouver by 29 percent making the Canadian city the world’s hottest industrial real estate market. When you compare this figure with the global average of 3 percent, Vancouver stands out in the world trends as the hottest spot for real estate.
IKEA and BMW AG have taken hold of the biggest industrial and logistics spaces. “But we haven’t even scratched the surface of the demand that’s going to continue to grow and put more pressure on the industrial market.”, CBRE Group Inc. vice president and sales manager Jason Kiselback said.
Vancouver is heavily attacked by e-commerce giants like Amazon.com Inc. that are increasingly demanding logistics and storage space in urban centers. Amazon is responding to consumer demands for online deliveries, and the city is the right spot where the last-mile deliveries take place.
“The big household retail names — you don’t realize that everything that they provide you has to come through a warehouse,” said Kiselbach. “The new retail is really warehouse direct sales.”
Lease rises, but supply remains a top issue
According to industrial forecasts, the region could run out of industrial land just within a couple of years. Some predict a shortage of industrial land as early as 2020. This may harm Vancouver’s economy as much as it does good to it. “These rising lease rates really speak to the strength of the economy — the growth in population, consumer spending,” says Kiselbach, adding, “there’s definitely the potential that we might lose some economic benefits if we can’t address the supply issue.”
If the issue of supply is not handled correctly, Vancouver is going to face a lot of problems, including issues connected with agricultural land. With a lot of owners trying to invest in warehouse forgetting about the condos on Vancouver’s waterfront, the market forecasts put a big question mark on whether this is actually to the good.