The Greater Victoria Industrial Market continues to remain strong well into 2021 despite the COVID-19 pandemic and constant government lockdowns. Vacancy rates remain below 1% throughout the region and, as a result of demand and supply imbalances, rental rates continue to appreciate. Vacancy is expected to remain at record lows while awaiting new supply.
Many medium to large scale developers have pushed hard to supply the market and capitalize on such pent-up demand. The most recent completed project in Langford, a 23-unit light industrial park built by Northridge Excavating, saw both phases sold out prior to completion. Approximately 1/3 of the units were sold by WWC to Vancouver based investors, the remainder of the units to owner occupiers.
The discrepancy in price per square foot (PPF) between Greater Victoria and Greater Vancouver is still vast, with investors finding much more value for their capital across the Strait on the Island. Lease rates have continued to increase in Greater Victoria and now sit highest in Canada, providing more favourable returns for investors.
There has been some large land acquisitions in the past 6 months in Greater Victoria. Notable transactions include the purchase of the Western Speedway lands in Langford by Strand Developments, an 80.97 acre site with 42.80 acres of net developable commercial land. They plan to bring a mixed-use comprehensive development with commercial/industrial product throughout.
Beedie, one of the largest industrial developers in Western Canada, has purchased a 13.15 acre portion of Langford at the Luxton Fair Grounds with 11.00 acres of net developable commercial land for $909,000 per acre.
Victoria is also set to see a multi-story industrial build as Edmonton-based York Properties has a proposal out located at the Victoria International Airport. The 7.7 acre site is set to be a distribution facility for a company that already services Greater Victoria–Amazon rumoured to be the client behind this exciting new development. This built-to-suit industrial model is becoming an increasingly attractive option in Victoria due to the low vacancy rates and rising leasing costs.
The stacked industrial concept is proving to be more and more popular, with many developments in Vancouver already following this design structure. As Victoria continues its rapid growth, these types of developments entering the market are a strong sign of the growth potential of BC’s capital city. If Amazon, the world biggest retailer, is in fact the client behind this project, it becomes another strong indicator of what the future holds for this exciting Victoria market.
BC Self Storage Overview
The storage market in British Columbia is bifurcated between major metropolitan markets and smaller suburban and rural markets. In both markets, storage demand is strong and growing. In the Metro Vancouver area, there has been a great deal of storage construction in the past 24 months with no less than 12 storage facilities in the planning and construction phase, with 3 having recently opened. In other markets around the province there has also been a great deal of construction, however most of this is of smaller Class B facilities. The main drivers of storage growth in British Columbia are immigration and economic development. As both of these drivers are forecast to continue, storage demand growth is expected too as well.
Although the COVID-19 pandemic put a temporary stop to rental rate increases, this pause in increases has gone away in most markets as of June 2020 and rental rates continue to increase in the majority of facilities across the province, with rental rate increases in some markets nearing the double-digit range.
Occupancies remained strong throughout the lockdowns of 2020 and saw increases in most markets across BC starting in May 2020. This has continued into 2021 and should continue into the summer rental season. In markets with new developments, lease up is going well in most facilities with some beating pre-pandemic leasing expectations.
The COVID-19 pandemic had slowed transactions in the self-storage industry. However, the pace of transactions has increased at the end of 2020 and into 2021, with a major sale of the Mayfair Storage portfolio in Metro Vancouver in April 2021. All sales in 2020-2021 have shown downward pressure on Cap rates as well as increased interest in the Self-Storage Asset class from not only storage operators but from other investors as well.
Written by Connor Braid, Harry Jones, and Patrick Wood for William Wright Commercial
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