The province's economic growth faces a serious challenge due to a shortage of industrial land in Delta and throughout the region, according to a commercial brokerage firm that deals with industrial property sales and leasing.
"There's no land and it's scary because you don't want to see economic growth fly away from the province," said Ryan Kerr, a Delta leasing specialist with Avison Young.
The firm's most recent report on Delta's industrial real estate sales transactions notes industrial vacancy tightened to 7.5 per cent this spring. The absence of new product and the accompanying shortage of available industrial land, which prevents additional Ind sh development, will continue to assert downward pressure on vacancy, especially as economic confidence improves in the U.S., according to the report.
The current supply in Delta is located primarily at Annacis Island, Nordel Way, the Tilbury Industrial Park and Boundary Bay Airport.
However, with the overall supply limited, there's going to be increasing demand for industrial land elsewhere in Delta and pressure on the Agricultural Land Reserve.
Noting the limited supply is pronounced throughout the Lower Mainland, Kerr said the most common type of facilities being sought as the economy grows are distribution-type centres.
tribution-type centres. "When you talk about Delta specifically, due to the proximity to the fastest growing port, distribution uses as well as export distribution uses are in high demand," he told the Optimist.
The Avison Young report also looked at the optioning of approximately 560 acres of farmland in South Delta to convert into logistics/distribution uses to support port expansion at Roberts Bank, where another three-berth terminal (T2) is planned. The status and likelihood of that redesignation remains unclear, Kerr said.
The report also mentioned the 335 acres at the Tsawwassen First Nation that will be designated for the new Tsawwassen Gateway Logistics Centre, but Kerr said it's a relatively small amount that's going to eventually open up compared to what will be needed.
"Obviously, pricing is reflective on supply and demand. If there's no supply, you're going to see prices that are prohibitive that's going to leave big box retailers like Target building massive distribution centres in Alberta as opposed to Vancouver," he said.
The report also notes that Tom Corsie, Port Metro Vancouver's vice-president of real estate, said he estimated there is a 10-year supply of land, which will be exhausted well before the capacity impact presented by T2.
"We have institutional developers, clients who come back from Toronto, and they have clients within their distribution portfolios that would like to have a presence on the West Coast, and you can't find land large enough to build something like that here, or if you can, it's not economical to do so," Kerr said.
Last year Metro Vancouver, which has conducted a number of inventories on the land supply in recent years, released its Industrial Land Intensification Analysis. That report found there are competing demands for much of Metro Vancouver's developable land.
"One result is that the region has among the highest industrial land prices in North America. The continued rise in industrial land prices could affect the Metro Vancouver economy in a number of ways. Some existing businesses might relocate elsewhere and other businesses could be deterred from locating or expanding in the region. There could also be an impact on Metro Vancouver's Gateway function, local employment opportunities, and the cost of goods produced and handled in the region," the report stated.
Concerned the region could run out of industrial land by 2020, the district is investigating ways to "intensify" industrial properties to add more uses to the current supply.