Industrial land in Metro Vancouver, going, going, gone?Posted on November 28th, 2014
Metro Vancouver’s supply of industrial land could be gone in less than a decade, according to a new study by NAIOP Vancouver.
Total available industrial inventory is now 2,919 acres and at current absorption rates, this is less than an 11 year supply.
Should REALTORS® be concerned?
“Half a dozen years ago, Vancouver feared downtown condo development would lead to a shortage of office space,” said Michael Goldberg, Professor Emeritus, UBC Sauder School of Business.
“So the City of Vancouver banned condos from the core in favour of office space and most importantly significantly raised allowable densities.”
The result: “a spate of large and small scale office construction, a major increase in supply (and even a looming glut),” according to Goldberg.
Goldberg explains that industrial land shortages will lead to a similar outcome for the following reasons:
- The basic economics of supply and demand suggest that scarcity in the face of rising demand leads to price increases. This has happened across Metro Vancouver with industrial land.
- As industrial land prices continue to increase through diminishing supply and rising demand, at some point, we will have to move to multi-storey industrial buildings to offset the high land costs.
- Fortunately, most industrial zones already permit higher density so that this transition should be far easier and smoother than has been the case for residential densification.
The future, Goldberg explains, will be different but in many ways just a return to the past when multi-storey industrial buildings dotted our waterfront, Yaletown, Gastown and older industrial districts across Metro.
NAIOP’s study is available at http://bit.ly/11ySCRJ
Source: Real Estate Board of Greater Vancouver; Dr. Mike Goldberg