With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1515520
Industrial properties have been a gold mine for Vancouver companies and their owners are still the happiest in the region. WORLD CALAMITIES, massive changes in shopping or office work, rising gas prices—in general, great news in recent years for owners of industrial property. Fuel costs skyrocketing? Then there's more demand to build and store goods on industrial properties as close to urban centres as possible. Online shopping increases? Supply chains wobbling inter- nationally? More need for storage and distribution space. People buying more stuff ? Demand for manufacturing space increases. In spite of that, even the industrial- property world in Vancouver has seen a recent slowdown. It's far from a crash. It mainly means vacancy rates have increased from near zero to a high of, gasp, 1.2 percent. But the industrial set are not quite as blissful as they used to be. Owners say that, where they used to have four tenants competing for each space that became available, now there Trend # 5 are four spaces for each tenant. Biotech and the region's bigger fash- ion companies, like Lululemon and Aritzia, are still expanding. A giant new Lululemon distribution centre in Delta— 370,000 square feet built by Wesgroup Properties—is one of the recent additions to the landscape. But fewer small- and medium-sized businesses have expanded or stayed in business as high interest rates wreak havoc on the economy and once-flush consumers reach the end of their pandemic savings. "It's the end of the binge from the COVID break. The volumes are down 20 percent from last year," says Marko Dekovic, vice-president of public affairs at Global Container Ter- minals. "And it won't get to 2019 levels until 2027." But that is helping everyone catch their breath. "It was a great time, but it was an unhealthy market. There was a real run-up in prices and a real decline in vacancy," says Jean Batie, leasing man- ager at Wesgroup Properties. The steadily increasing lease rates did solve one prob- lem that other sectors have not been able to cope with as well, which is the jump in interest rates and construction costs over the last couple of years. Wesgroup is one of the latest to try out the new concept of multi-storey indus- trial with a Coquitlam project, as people try to work their way around the region's industrial-land shortage. "It's a new product and we're excited," says Batie. Companies like Wesgroup have also had to gear up to new demands in the indus- trial sector: much higher ceilings (up to 40 feet) with huge new power require- ments. They're putting them in, though, these days, they're not necessarily get- ting higher rents for them. But it is help- ing them land what they call the "golden geese"—the big distribution centres. 34 i S t o c k / M ik e L a p t e v B C B U S I N E S S . C A M A R C H 2 0 24 REAL ESTATE