In November 2022, construction started on what is thought to be one of the last parcels of industrial land available in the Vancouver region, a 140-acre site in Abbotsford.
“I’d say this is the largest tract of land that we have left to build, not just in Abbotsford, but throughout Metro Vancouver,” said Jeff Rank, senior vice-president of leasing at QuadReal Group, which is building the Xchange Business Park on Mt. Lehman Road.
The first two buildings, built on spec, will cover 120,000 square feet and 140,000 square feet, respectively, and designed for either multiple tenants or a single tenant, according to Rank.
Rank said they will continue to build out the nine remaining buildings as the first are leased up.
Once built, the project will total 1.3 million square feet of light industrial space.
It appears impressive, but the take up on the Abbotsford acreage underlines the incredibly tight industrial supply in the eastern Fraser Valley. Abbotsford, with nine million square feet, holds 13 per cent of the industrial real estate in the Fraser Valley, Chilliwack holds 9 per cent, while Langley accounts for 16 per cent and Surrey dominates with 60 per cent of built industrial property.
Frontline Real Estate Services’ industrial team of Todd Bohn, Alex Girling, and Braydon Hobbs prepared a study on the industrial action from Surrey to Chilliwack that shows how land and lease prices soared during the pandemic. Prices have eased since peaking this spring, but remain near record highs, they say.
In Port Kells in eastern Surrey, a 2.29-acre industrial site on 177A Street was purchased October 2 for $15.34 million, the equivalent of $6.7 million per acre, Girling noted.
The Port Kells parcel closed just as the market began to cool, but he said industrial buyers or tenants will find eastern Valley prices are still similar to that in Greater Vancouver.
A recent transaction in Abbotsford recently closed at $4.7 million per acre, 17 per cent lower than the peak-price average of $5.6 million per acre in the first quarter of 2022, according to Frontline. Data from other submarkets indicates that industrial land prices have fallen 15 per cent to 20 per cent over the past six months.
In Mission, 74 kilometres east from Vancouver, the 130-acre Silver Creek Industrial Park is now sold out, but about 120 acres in greenfield sites are being prepped for potential industrial use, according to Stacey Crawford, director of Mission’s economic development office.
“We have a new 25-acre industrial park coming on-line now at the corner of Lougheed Highway and Nelson Street,” he said. This is adjacent to Silver Creek Industrial Park, and the first building permit is expected to be submitted this spring.
Mission also has three larger greenfield sites that are in various stages of discussion, most now zoned industrial, but that could change.
Collectively, these three properties total approximately 120 acres, and two-thirds of the land is on the Mission waterfront. They will require significant servicing and other pre-development work and Crawford expect these properties won’t come to life for two to four years.
Goodman Commercial of Vancouver has one of the waterfront parcels listed and partner Mark Goodman said he is “negotiating with a few groups” on the 87-acre site.
How much is Mission industrial land selling for? Crawford said it is difficult to say because of few recent sales.
“I would suggest it is in the neighbourhood of $2.25 million an acre in Mission,” Crawford said, “I stress this is today and could change in an hour.”
Further out in Chilliwack, where Molson-Coors moved from Vancouver six years ago to build a new $200 million brewery, land prices are up sharply from pre-pandemic days.
During the first quarter of this year, Chilliwack industrial land was selling at $4 million per acre, according to Hobbs, but he noted these were peak prices in February and no industrial land sales have been seen since.
Industrial strata
But the Frontline agent has spotted an opportunity in Chilliwack: industrial strata.
“Chilliwack has an abnormal lack of strata supply relative to other municipalities in the Lower Mainland,” he noted, but “ Time and time again we are interacting with buyer and tenant groups who are contemplating moving their business out to Chilliwack to avoid financial pressures associated with skyrocketing lease rates closer to Vancouver.”
In Chilliwack industrial lease are in the $15 to $16 per square foot range – similar to Burnaby or Surrey – but industrial strata space has sold for as low as $243 per square foot, well below the average of $429 per square foot in Greater Vancouver.
Frontline estimates that based on demand and the short supply of industrial strata, prices of from $400 to $425 per square foot could be achieved in new Chilliwack builds.
