The vacancy rate in the Metro Vancouver industrial real estate market rose by 20 basis points in the third quarter of 2024, bringing it up to 3.1 per cent.
This marks the ninth consecutive quarter of rising vacancy rates, although the latest rate of 3.1 per cent still remains among the lowest in major Canadian cities, said a new report from commercial real estate services firm Avison Young (Canada) Ltd.
According to the report, the last time the industrial vacancy rate surpassed three per cent was in Q2 2015, when it stood at 3.8 per cent. Over the past two decades, vacancy rates have fluctuated between a high of 4.7 per cent in Q1 2010 and a low of 0.3 per cent in Q2 2022.
“For larger tenants seeking spaces over 100,000 square feet, there were 18 available options in Q3 2024 compared to 13 options last year and just two options three years ago,” the report said.
Meanwhile, gross rental rates are stable at just over $27 per square foot, while net rental rates have declined by 2.8 per cent quarter-over-quarter. Gross rent is where the landlord pays all operating expenses and taxes, while net rent is where the tenant pays all operating expenses.
“Two sub-markets have consistently exceeded the $30-per-square-foot mark in gross rents, with North Vancouver reaching $32.32 and Vancouver at $30.83,” the report stated.
“Class A properties continued to command premium rates while older product saw a more drastic rate decline. The bifurcation in rents between product classes has been steadily increasing.”
Avison Young noted that while little new supply was delivered in Q3 2024, there is a robust construction pipeline.
“Despite ongoing challenges with obtaining financing, 13 new projects broke ground this quarter, leading to the highest total area under construction in the past year,” the report said.
There are currently 61 projects underway in the region representing 7,811,770 square feet of future supply. Activity is highest in Surrey (14 projects under construction), followed by Vancouver (12 projects) and Abbotsford (eight projects).
