A new report showing Victoria’s industrial land base has the lowest vacancy rate and demands the highest lease prices in the country is a clear indication industrial land is under pressure and could use some protection.
That’s the view from Ian Maxwell’s office at the Ralmax Group, a conglomerate of 12 industrial firms including Point Hope Maritime, United Engineering, Ellice Recycling and Trio Ready-Mix, which combine to cover about 20 acres around the Inner Harbour and Rock Bay.
Maxwell, founder of the group, said the lack of land puts pressure on pricing, but he stressed those prices don’t accurately reflect the value of the land.
He said to value the land based only on what an owner can get for it at any one time, misses the mark. Instead, he said it should be valued on what the community gets out of the land in the jobs it creates, the families it supports and the value that is driven back into the companies because there is reason to reinvest in them.
“The thought I had was during COVID we kept working and generating paycheques. Our people didn’t go on [federal assistance programs] and things like that, they kept working,” said Maxwell. “How do you put a value on that? If you go to put a price on it, you can’t put a price on that. There’s value there.”
Maxwell said that’s proof industrial land should be protected. He has on more than one occasion floated the idea of a provincially controlled industrial land reserve, similar in function to the agricultural land reserve.
He said at this point industrial land around the province is protected only by the whim of elected municipal councils, and he worries some of them may not have the kind of long-term view of land-use that is required to see the community value in preserving those lands and the jobs they represent.
There’s no question industrial land is under pressure.
Colliers Victoria’s most recent industrial market report notes the region’s industrial vacancy rate is 0.2 per cent, the lowest in Canada, while the average rental rate is $17.07 per square foot, eight per cent higher than the rate in Vancouver and about 24 per cent higher than in Toronto.
Ty Whittaker, vice president with Colliers Victoria, said construction cost, limited supply, scarcity of land in some parts of the region and supply-chain disruption have driven up the cost of land and the cost of establishing industrial space.
Even though there is a lot of industrial space in the pipeline — there is an expected 514,600 square feet expected to hit the market on the West Shore late next year — prices are expected to climb.
Whittaker said that’s down to demand, and the fact that the new space is already 73 per cent leased.
Demand is coming from companies like Tesla and Amazon, who are on the Island to serve a population that is growing. It also comes from the expansion needs of a number of companies in the construction sector that have been thriving for the last several years.
“If you’re related to commercial or residential construction, you’ve been growing. The countertop guy has grown from what he was five years ago and the cabinetry guy has grown, plumbing wholesalers and electrical wholesalers that all have grown,” he said. “It’s a byproduct of the strength of the residential [real estate] market and the industrial market supporting that.”
Whittaker said the problem is not isolated to Victoria, but is being experienced across the country.
He said this region is attractive to investors, so there is money to build more, if space can be found.
Whittaker said because space is at a premium it could lead to hybrid developments that include light-industrial uses at grade and residential development in higher storeys, allowing residential density to pay for the industrial side of things.
“It makes it more economically viable because it’s so hard to buy land anywhere,” he said.
Maxwell said given the region has a limited supply of land, protection is one piece of the puzzle, but using it more effectively is another.
“It’s no different than building highrises instead of single-family homes downtown, we have to use it more intensely, we also have to recognize that some industrial businesses or operations require empty spaces (as lay-down and assembly areas),” he said.
“They might be used for a parking lot for storage for years, and then all of a sudden it comes to life and it does something really great for the community and for the business.”
