A short supply of industrial land in the Lower Mainland has helped sites adjacent to last fall’s floods in the Fraser Valley hold and even increase their value in the first quarter.
While the flooding and landslides that cut off the region from the rest of Canada in mid-November put activity on hold for two months as the community and city responded to the disaster, activity picked up during the opening months of 2022.
“You’ve seen it roar back in a big way. Things are very much back to normal and Abbotsford is skyrocketing once again in price point,” said Kyle Dodman, vice-president, industrial properties with CBRE Ltd., who specializes in the Fraser Valley. “I feel like every lease deal that we do is a new benchmark for net lease rates.”
Dodman says land sales are approaching $5 million an acre in Abbotsford. CBRE statistics indicate that gross lease rates in the city remain lower than in Metro Vancouver but that average asking rates were $14.77 a square foot in the final quarter of 2021, up 15 per cent from the previous quarter. Upward movement continued in the first quarter of 2022, pushing asking rates above $15 a square foot square foot.
Sumas industrial sites were fortunate in being on the west side of Sumas Prairie. The scenes of dramatic flooding came to their doorstep but largely left them unscathed.
“There was a little bit of, ‘If this happens again, will we be underwater?’” Dodman said. “It was nice it never got to that point, but it was certainly at the front line.”
Since flooding is not an annual event in the region, most buyers and tenants will likely see last fall’s flood as a one-off event. Government recovery funding and a cross-border initiative to address the risk of future flooding in the Nooksack watershed will also support confidence in the region.
B.C. has budgeted $1.5 billion over three years to support recovery. Details of the initiative are expected later this spring.
Banks have also been supportive, maintaining similar lending policies now as before last fall’s floods. Properties that were good risks before the flood remain good risks now.
BC Assessment revised downwards approximately 97 per cent of properties in Lytton following last summer’s wildfire, but it has not released similar information regarding properties affected by last November’s flooding.
Yet some buyers will likely opt to avoid the area and focus on opportunities either in West Abbotsford or Chilliwack, a fast-growing city with a very large employment base that has more options and alternatives than Abbotsford does right now without the same environmental risks.
“But it’s difficult to find stuff anywhere, so you’re going to be hard-pressed to try justifying someone saying no to a good piece of industrial property in the Sumas area,” Dodman noted.
