Greater Victoria’s vacancy rate for industrial properties is at a 10-year low of 1.71 per cent as the region faces a “critical undersupply” of industrial-zoned land.
There is little active construction of industrial space, said the Greater Victoria Industrial Market Report from Colliers International’s local office.
The lack of supply has the “potential to adversely affect our economy’s growth,” said the report.
A shortage of industrial space is pushing up rents and property values, Ty Whittaker, senior vice-president at Colliers in Victoria, said Wednesday.
Last year’s vacancy rate in the industrial market was higher at 2.4 per cent.
On the positive side, “the economy has been very, very strong obviously for a number of years,” Whittaker said.
“Contractors large and small are still looking two or three years out knowing they are going to be busy with the volume of work that is taking place.
“That really is the trickle-down effect to the health of our business parks and more and more of these companies needing to expand and grow and take on more space and take on more employees, if they can find them.”
The largest new industrial-class building that’s gone up in the past 12 months is the 44,000-square-foot warehouse and distribution facility for Islands West Produce in Royal Oak.
In the past 12 months, a total of 91,733 square feet has been added to create an overall inventory of 9.2 million square feet.
During that time, 200,747 square feet of positive absorption has taken place. That figure reflects the net change in commercial space in a specific area.
The absorption falls below that of the 2017 report because there is little available.
“Residential and commercial construction, Department of National Defence contracts, technology companies, and manufacturing have all contributed to the thriving marketplace,” the report said. “Most of the major industrial parks in the municipality of Victoria are now at capacity and have no additional land available for development, leaving many companies contemplating acquisitions in alternative markets such as West Shore to support their growth.”
The West Shore, is “really just the only place where there’s land,” Whittaker said.
Pro-development Langford is a longtime leader in housing construction in the capital region, and its population has boomed in recent years.
“I do think that there has been a real lag in supply” of industrial space in the West Shore, Whittaker said.
“With all the residential that has happened out there, there hasn’t necessarily been that commercial support. But you are going to start seeing more and more of these companies locate their businesses out there.
“One of the biggest tell-tale reasons is that their employment base now lives out there.”
Existing industrial buildings are in demand by buyers. “Land and replacement costs are appreciating, and this supports higher sales values for the existing product.”