Industrial real estate developers are building on spec in Delta, B.C., drawn by the the potential of the new South Fraser Perimeter Road. The $1.26 million, 40-kilometre, four-lane highway will run along the south side of the Fraser River, from Delta to Langley. The roadway, which opens this December, is meant to remove large trucks from residential streets, connect to rail and port infrastructure and shorten commuting times by as much as one hour.
"The full impact [of the freeway] remains unknown, but it could ramp up demand for developable industrial land and tighten vacancy further," noted Avison Young in a report on the Delta industrial scene. The commercial broker added that while the dollar value of deals in the Delta in 2012 was the lowest since 2008, at $74 million, the number of transactions, at 30, was the highest.
In the first half of 2013, 19 deals worth a total of $65.6 million have been completed. The low number of properties available for sale has also contributed to the crunch. Vacancy rates are currently at 6.9 per cent in Delta, down from 7.5 per cent in spring 2012.
Developers appear convinced of Delta's potential and have kicked off the biggest speculative industrial construction spree in B.C., with more than 1.5 million square feet breaking ground.
The projects include:
• Dayhu Group's 900,000-square-foot Boundary Bay Industrial Park, itself the largest speculative industrial project in Delta's history.
• The South Delta Industrial Centre by Triovest, with 277,000 square feet in two buildings.
• Grosvenor's 160,000-square-foot Millennium V development on Annacis Island.
• The 120,000-square-foot Tilbury West Corporate Centre II, phase 1, by Beedie Development Group.
None of these projects have secured tenant commitments and it is not known if individual companies will be gunning for leases or strata sales. If the latter - and Beedie for one has had some success in this field - current industrial sales see property selling for around $120 per square feet, but spiking as high as $393 per square foot, the price paid for 9,550 square feet at 6537 River Road in March. In the largest sale, Trivost paid $64 per square foot to acquire the former Buckeye Technologies manufacturing plant for its South Fraser Industrial Centre, a deal worth $20.6 million.
For a full report on Delta oppportunities, see the September issue of Western Investor.
