Greater Victoria’s industrial real estate market has hit a new low.
A strong, diverse economy has driven the vacancy rate on industrial land in the region down to 0.6 per cent, a level not seen in more than a decade, according to a new data released this week.
Colliers International’s second- quarter report on the industrial market noted that with no new industrial land being developed in the short-term, the rate could continue to fall.
It was 1.7 per cent a year ago.
Colliers vice-president Ty Whittaker said the low rate and high demand are symptoms of a strong economy.
“I think it says our economy is extremely healthy and has been booming along for a long time,” Whittaker said, adding the demand for land might have caught developers and landowners off guard.
“I think it may be a case where people haven’t realized the amount of demand that there has been,” he said. “It may not be a lack of planning, but there may have been a lack of aggressiveness from developers seeing there is an opportunity to service the industrial market.”
The report points out there was just 44,000 square feet of industrial land added to the marketplace over the last year, while 142,000 square feet of space was swallowed up by businesses looking to establish themselves or expand.
Whittaker said growth is difficult when there’s so little available land, saying if someone was to be looking for 5,000 square feet of space, there might only be a few options in the entire region.
“That’s not good for businesses that need to grow and want to grow,” he said.
“That can be frustrating.”
Whittaker said there has been an interesting shift in thinking about the West Shore over the past few years because of the scarcity of land. “It used to be hard to talk people into doing business on the West Shore because of the traffic and everyone said they needed to be downtown,” he said. “Now people are preparing to move their businesses to the West Shore because that’s where their employees now live. They see the benefit for their labour force and employee retention.”
The trouble is there’s no available industrial land out there, either. The report notes the West Shore’s current vacancy rate is 0.0 per cent down from 1.6 per cent in the second quarter of 2018.
In fact, the only part of the region that has a vacancy rate above one per cent is Central Saanich at two per cent.
There is an expected 300,000 square feet of industrial land that should be coming onto the market in the next 12 to 18 months on the West Shore, and there is another 100,000 square feet planned for North Saanich.
“That is the only way we will dig ourselves out of this low vacancy rate,” he said.
The high demand and lack of supply have had the obvious effect of driving up prices.
According to Colliers’ report, the average asking rent is $15 per square foot, a 15.4 per cent increase from the same time last year.
