Demand for industrial space in Burnaby was “insatiable” in 2018 - with vacancy reaching new lows as rental rates pushed higher and deal-and-dollar volume from industrial sales remained strong.
That’s according to a new report on key trends by analysts Avison Young that also included Coquitlam.
“A depleted development pipeline is unable to offer meaningful relief in the short- to mid-term to either market as industrial land prices remain elevated and availability highly constrained, which continue to throttle the new development activity necessary to meet demand,” read a news release.
According to the report, Burnaby recorded more than $203 million in 44 sales in the first 10 months of 2018, surpassing the number of deals closed in all of 2017, as well as exceeding that year’s total dollar volume of $137 million.
While sales activity in 2018 will surpass the dollar-volume record of $204 million, but not the 73 done deals established in 2016, demand for Burnaby industrial space will remain undiminished in 2019 with owner-occupiers and investors vying to acquire properties, said the report. With industrial vacancy in the 28.8 million-square-foot Burnaby market at 1.6 per cent at the third-quarter of 2018, down from 2.4 per cent a year earlier, rental rates continued to rise in 2018 to an average of $12.84 per square foot.
“With the exception of two large investment sales, the majority of transactions in 2018 were owner-users with a large proportion being strata units,” said Avison Young principal Russ Bougie, based in Vancouver. “With the significant changes in the market, we forecast a continued transition of some users moving to less expensive non-core markets, and continued high demand for vacant space whether it’s on a sale or lease basis.”
While Burnaby and Coquitlam remain highly sought after by owner-occupiers, tenants and investors, sales and leasing activity will likely slow in 2019 due to a lack of such opportunities in those markets.