Growing confidence in the Fraser Valley’s industrial real estate market adds up to ‘robust’ growth in the sector this year, according to a report released Tuesday.
Indicative of the activity is a major new industrial park in Pitt Meadows — which recently opened its first building — that it’s developers say will eventually be the second-largest industrial park in the province, after Richmond’s Kingswood Industrial Park.
“We’re seeing a big change from ’09 and ’10 when things were fairly muted,” Avison Young broker Michael Farrell, who specializes in Fraser Valley industrial property sales and leasing, said in an interview of their report, its first “sub-market” report on Metro Vancouver industrial real estate released in 2011.
The report followed an earlier 2010 year-end report focusing on the entire Metro Vancouver region that concluded there was a substantial increase in industrial real estate investment last year.
“Tenants are more confident and landlords are more willing to give inducements to allow those tenants to take on more space,” Farrell said of the latest report, called Avison Young’s Spring 2011 Fraser Valley, BC Industrial Report.
According to the latest report, transaction volumes stabilized in 2010, setting the stage for 2011 growth.
“With deal velocity and the pace of land sales in the Fraser Valley increasing and rental rates facing upward pressure, early indications are pointing to an active industrial real estate market in 2011,” the report said.
The report, which looked at Surrey, Langley, Abbotsford and Chilliwack, concluded that while rent levels throughout the Fraser Valley industrial zones are starting to rise, overall vacancy levels continue to decline.
According to the report by Avison Young — a full-service commercial real estate company operating across Canada and the U.S. — Fraser Valley industrial real estate sale transactions and dollar volume in 2010 exceeded 2009 levels.
Citing RealNet Canada, the report said that in 2010, the market witnessed 155 transactions with a total value of $194 million versus 146 transactions with a total value of $191 million in 2009 (148 transactions worth $219 million in 2008). It said activity in 2010 was moderated by a lack of available quality product.
Although the report predicted “robust” 2011 growth, no specific dollar or percentage projections were included.
However, it concluded that total Fraser Valley industrial real estate sale transactions from October 1, 2010 to March 31 (greater than $1 million) totalled $94.67 million.
The report cited the Beedie Group as a “very active developer of large-bay industrial strata projects,” including recent buildings in Campbell Heights Business Park in Surrey and Tilbury Industrial Park in North Delta, both of which have sold out.
That, the report said, along with strong activity at Gloucester Industrial Estates in Langley in the past 12 months, “underlies the improved confidence industrial users and tenants have in the economy.”
Although technically not part of the latest Avison Young study area, a major new industrial park development by the Onni Group of Companies near the new Golden Ears Bridge points to the strengthening market.
Onni says that when completed it will be Onni’s largest development and the second largest industrial park in B.C.
“We have the potential to build up to 1.9 million square feet of industrial space, Onni senior manager John Middleton said in an interview. “That’s pretty significant.”
Middleton was referring to his company’s Golden Ears Business Centre, which recently opened its first 75,000-square-foot building and is moving ahead with a second 110,000-square-foot building, possibly in the late summer.
Middleton said Onni bought the land about 18 months ago at a time when the industrial market was in the doldrums.
“We realized it was a special location and we knew the economy would turn around and that this would be a well located piece of property.
“Now, there’s confidence in the market [and] there’s a growing interest by U.S. retailers heading up to Canada.
“We’re receiving phone calls from real estate agents and tenants, as opposed to us trying to dig up tenants.
“Leasing rates are starting to creep up.”
The new business centre is part of the new South Fraser Perimeter Road network of developments, connecting bridges with transportation infrastructure at ports in Vancouver and Delta as well as with trains. The efficiency, time and fuel consumption savings will be a huge benefit for tenants, Onni says.
Middleton said that more than anything the new park represents Onni’s increased confidence in the B.C. economy.
According to Onni, the new business centre hopes to cater to big businesses, like Canadian Tire and Target.
According to Avison Young, the city with the largest industrial park footprint in Metro Vancouver is Richmond, followed by Surrey, Burnaby, Vancouver and Delta.
The company’s next 2011 sub-market report, on Delta, is expected to be released in about two or three weeks.
Source: The Vancouver Sun