Over the past five years, the Metro Vancouver industrial market has become a case study in cyclical momentum: overshooting during the highs, pausing during uncertainty, and now repositioning as capital begins to re-enter.

Coming out of the early pandemic era, when borrowing costs were at historic lows, industrial land was snapped up at a record pace. Projects were launched quickly, bullish underwriting pushed construction forward, and product was snatched up quickly. Much of that inventory has since been absorbed or is in the final stages of absorption today. But the future pipeline of new product is diminishing, which may prove valuable to positive absorption in 2025-2026.

2024 recorded the lowest amount of new construction starts in recent years, and the total space under construction has dropped sharply. While current availability remains elevated, we are already seeing absorption start to chip away at that inventory. Q1 2025 saw vacancy rate and availability rate decrease by 10 bps and 40 bps respectively. The slowdown in new supply means that within 12–24 months, we could be back in familiar territory: lower vacancy and upward pressure on rents.

This emerging supply gap is a direct result of a reactive development cycle. As interest rates rose and financing became more expensive, developers quickly hit pause. Land acquisitions slowed, pre-sales stalled, and 2024 was largely devoid of major new project announcements. The result is a clear break in the pipeline, one that will likely be felt in 2026 and beyond, when today’s lack of starts translates to limited new inventory.

Yet despite this cautious backdrop, smart investors are moving. Quietly, capital is flowing back into the markets, not chasing momentum, but recognizing value. With pricing down from peak levels, competition subdued, improved financing terms, and development sidelined, the current environment offers rare entry points.

There’s a well-known quote from Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.” In this case, it’s not about bold contrarianism, it’s about understanding that market sentiment lags fundamentals. And the fundamentals of Metro Vancouver industrial, constrained land supply, strong long-term demand, and a diminished pipeline, are very clear.

In short: while the headlines point to softness, the setup suggests strength ahead. We’re not in a downturn; we’re in a reset. We’ve seen this in more equity markets, it’s no different here. The next market leaders will be those who recognize that and act early, before the next wave of demand pushes us back into a supply-constrained, price-accelerating environment.

Written by Matthew Ho and Steven Lam for the Industrial Dossier. Subscribe to their monthly newsletter for more commercial real estate insight.