Metro Vancouver’s tight industrial sector has seen vacancy rates plunge to 2.4 per cent, the lowest level since 2007.
“Absorption for the year was four million square feet, the second-highest total ever,” said a report from CBRE, a commercial real estate broker.
CBRE notes that the film industry, which grabbed about a third of all the new industrial leases last year, was a primary driver, along with traditional demand for mid-bay lease space.
Some of the biggest lease deals of 2016 were related to the film industry, including the 196,000 square feet taken in Surrey by Skydance Media (see photo) and a 222,879 Langley warehouse leased by Adjacent Production Services.
CBRE noted that 3.6 million square feet of new industrial space came to the Metro market in 2016 – the second highest level on record – but it may not be enough to meet demand.
“We expect leasing demand to remain strong, causing vacancy rates to decrease and placing further upward pressure on lease rates,” the agency forecast.
Much of the leasing demand is seen in Delta and Surrey, which accounted for 80 per cent of total absorption of industrial space and nearly half of all the new supply in 2016.
Average industrial lease rates in Metro Vancouver inched up to $9 per square foot as of the end of 2016, but are much higher for some Vancouver locations.
