British Columbia’s Fraser Valley is in the midst of a land rush that has driven prices up three-fold in the last two years and helped make land the dominant real estate investment in the Lower Mainland.
In the first quarter of this year, land accounted for 56.8 per cent of all the property transactions in the Lower Mainland, according to Altus Group, with sales of residential development land alone worth more than $1.1 billion. Sales of non-residential land, primarily for industrial, tallied another $530 million in the three-month period. But, as reflected in housing sales, sales of residential land in the Lower Mainland, while still strong, were down 46 per cent from the fourth quarter of 2017 and down 21 per cent from the white-hot pace in the first quarter of last year. Sales of non-residential land also cooled in the first three months of this year, dropping 15 per cent from the fourth quarter 2017 and 9 per cent below the first quarter of 2017.
Yet, with land sales averaging nearly $500 million a month so far this year, any talk of a downturn appears misplaced, especially in the Fraser Valley.
“The Fraser Valley is the future,” said Joe Varing, director of sales for Abbotsford-based Varing Marketing Group, with Homelife Glenayre Realty Company Ltd.
And, despite continual warnings of a land shortage, Varing maintains there are plenty of “greenfield” parcels in the Fraser Valley ready to build on.
“There is a bottomless supply of land,” he said.
Varing recently sold around 30 acres of bare land in Langley in the $50 million range, among dozens of other land sales.
Varing estimates valley land prices have tripled since 2016. Because of these rising prices, some detached homeowners have found value in joining with adjacent neighbours in land assemblies. One example in the Yorkson area of Langley saw three housing lots assembled into a 3.6-acre parcel that sold for $8.3 million.
Varing often markets development sites to Vancouver area multi-family developers looking for opportunities from White Rock to Langley, Abbotsford and Chilliwack. The planned extension of light rapid transit, he said, has boosted demand for land assemblies from central Surrey to Langley. Developers are land banking, he said, and looking forward three to seven years for new multi-unit residential projects.
“Land is the new gold,” Varing said.
While Varing concentrates on residential development parcels, demand for Fraser Valley industrial land is also ramping up, according to Avison Young.
More than 1.9 million square feet of speculative industrial construction is set for delivery in the Fraser Valley over the next 12 months, Avison Young confirms – and the speculators are willing to pay big money to get into the market.
This March an investor, a B.C. numbered company, paid $2.4 million per acre for a parcel on 66 Avenue in Surrey, and Zenith Development Ltd. paid $2.7 million an acre for 2.5-acre site on 88 Avenue in Surrey in the same month. Abbotsford prices are also catching fire, with industrial land prices topping $1.1 million per acre this year in five recent deals.
Industrial vacancy rates are at near-record lows of 1 per cent in Surrey, 1.5 per cent in Langley and 1.8 per cent in Abbotsford, which are among the lowest in the Lower Mainland, according to CBRE.
“We are at a critical stage and we need to find industrial areas for these companies,” CBRE vice-president of industrial Chris MacCauley said. “It used to be that when companies couldn’t find space in Vancouver, they moved to the Fraser Valley. But now the valley doesn’t have much inventory left either. There’s a threat we’re going to see companies relocating out of province or it will limit their growth potential.”