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  • Writer's pictureBrian Reems

How the Commercial Real Estate Market in Vancouver is Driving Third-Party Logistics Storage Rates


Real Estate Market Pressure on Third Party Logistics Storage Rates

The Metro Vancouver industrial market is characterized by a restricted land supply due geographical constraints such as oceans, rivers, and mountains as well as the Agricultural Land Reserve. Some of these characteristics (among others) have helped to put upward pressure on land pricing in general which has led to one of the tightest industrial markets in North America at a vacancy rate of less than 0.5%


Increased Volumes in E-commerce Distribution in Vancouver and The Central Bank

The massive trend towards e- commerce coming off of the pandemic as well as the enormous quantitative easing by global central banks have put substantial upward pressure on all facets of industrial real estate. Perhaps it is most noticeable in lease rates which have approximately doubled over the last 24 to 30 months making the market challenging to navigate and stay on top of for tenants, landlords, investors, and brokers alike.


Leasing Vs. Buying in Vancouver vs Buying Warehouse Space in Vancouver

In recent times Tenants coming off 5 year and 10 year lease terms have been looking at Net Rental Rates for renewals that are generally in the realm of double their current lease rates or in some cases even two and a half or more times their existing lease rates.

This has led to a vigorous review of options and also an increase in owner user sales over the last 24 months with many businesses choosing to own instead of lease. Inflationary forces have added fuel to the fire of rising costs as construction pricing has substantially increased, leading to challenged economics for new projects and build to suits with already high land costs.

However, the recent rise in interest rates has provided some respite slowing the down the sales market which has made it an excellent time for well capitalized businesses to consider purchasing strata units or existing building stock. The challenges are now akin to the housing market where sales prices are off the peak but the increased interest rates lead to a higher carry. This is also little reprieve for tenants as lease rates have remained sticky with upward pressure and are forecasted to remain at elevated levels over the coming months.


If you are interested in getting the best rates on commercial lease or purchase options, contact Brian Reems

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1 Comment

coffee zee
coffee zee
Feb 20, 2023


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