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Supply can’t match industrial demand

Delta is one of the most desired markets in region, pushing prices higher and vacancy rate lower
Industrial building
Delta’s hot industrial real estate market has been made hotter by the introduction of the South Fraser Perimeter Road.
Demand for industrial space is expected to continue to raise prices and keep vacancy rates near historic lows in Delta, according to Avison Young.
 
In its latest industrial land overview report, the commercial real estate firm notes that while Delta’s industrial market remained active last year with 45 transactions valued at a near record $233 million, there are few options for those businesses seeking space in excess of 75,000 square feet.
 
The report found that despite a limited number of properties being transacted in Delta’s industrial market since last summer, some large leases were recorded in the Nordel, Tilbury and Annacis Island areas. That includes one of the largest industrial leases in recent history with the B.C. Liquor Distribution Branch leasing the former Home Depot distribution centre in the Tilbury Industrial Park.
 
Mayor Lois Jackson and others recently broke ground on the Beedie Development Group’s Delta Link Business Park in the Tilbury area.
 
The Avison Young report notes new supply is not anticipated to relieve upward pressure on rental rates or tightening vacancy in Delta in the next 24 months.
 
“Richmond and Delta will remain two of the most desired markets for tenants and owner-occupiers alike,” the report states.
 
In an associated news release, commercial real estate brokerage firm CBRE said Metro Vancouver’s industrial vacancy is just 2.2 per cent, while space completing this year is already 55 per cent preleased or sold. In 2015/2016, demand for industrial space was three times greater than total new space added to the market.
 
“Surrey and Delta have attracted 64 per cent of the industrial demand in the region,” said Jason Kiselbach, an associate vice president with CBRE. “The South Fraser Perimeter Road has been a game changer.”
 
A report last year from Metro Vancouver noted that between 2010 and 2015, the region lost 352 hectares of land designated for industrial use, mainly to commercial and residential developments. The regional supply of industrial land is under significant pressure for conversion but the demand is still increasing. A shortage is expected in the next 10 to 15 years.