Vancouver Sees World’s Largest Rental Increase for Industrial and Logistics Space, According to CBRE

Cost to rent in Vancouver remains lower than Hong Kong, London and Tokyo

Vancouver, BC – August 7, 2018 — Vancouver industrial and logistics (I&L) lease rates increased by 29.1% this year, representing the largest increase in the world, according to CBRE’s annual Global Industrial and Logistics Prime Rents report. With an industrial availability rate of 2.4%, the second lowest in North America, and a relative lack of vacant high-quality Class A product, Vancouver saw the biggest increase globally, with an all-time-high, year-over-year growth in prime I&L rent in Q1 2018. Prime logistics rents are the highest achievable rates for top-quality warehouse and distribution space.

Vancouver’s increase is dramatic when compared to the global average of 3.2% year-over-year, exceeding the previous 12-month average increase of 2.2%. However, while Vancouver saw the largest percentage increase to USD $7.56 per sq. ft., it did not rank amongst the world’s top 10 most expensive markets. In fact, Vancouver ranks 25th, well below Hong Kong (USD $30.99), London (USD $22.35) and Greater Tokyo (USD $19.96), the top three most expensive markets.

“These price increases are a result of continued dwindling industrial supply, doubling occupier demand and continued growth of Vancouver’s population,” said Jason Kiselbach, Vice President and Sales Manager at CBRE Vancouver. “This is a testament to Vancouver’s growing economy and strong retail consumer spending. Industrial users understand the value of having port access and proximity to a growing population that is increasingly demanding expedient delivery of products and services.”

“This should however serve as a wake-up call for the smaller, family-owned, industrial businesses that have seen, not only an increase in rental rates, but in a number of other costs as well, including property taxes, wages and transportation. These businesses need to consider locking in rates now with early, long-term renewals to hedge against further cost increases.”

Despite an uncertain geopolitical environment, the global economy continues to support a strong industrial sector in other major hubs worldwide as well. In the U.S., Oakland and Seattle also saw robust prime rent growth at 14.0% and 13.4%, respectively. These industrial hubs, including Vancouver, are experiencing limited supply and strong demand from I&L users, including food distribution, third-party logistics (3PL), building supplies and consumer goods.

Prime I&L rents offer insight into the strength and momentum of high-end warehouse markets across the globe. The fact that growth of prime I&L rents has accelerated globally bodes well for the industry’s continued momentum. “This is a positive indicator that we’re still seeing global growth roughly six years after the U.S. market for I&L real estate began its recovery from the recession,” said David Egan, CBRE’s Global Head of Industrial & Logistics Research. “This underscores the theory that e-commerce driven demand for logistics facilities has created a fundamental shift in this market, establishing new baselines for occupancy, rents and other measures.”

According to CBRE’s report, supply chain and e-commerce dynamics have fueled rent growth at different rates across the region. This has led to record-low vacancy rates and record-high rents in virtually all markets in both Canada and the U.S. Of the 71 global hubs tracked by CBRE Research, 49 recorded an annual increase in prime rents.

Top 10
Fastest Growing Markets
(In annual percentage change per annum; as of Q1 2018)
Rank ​Market​ ​Annual Change (%) ​Prime Rents (USD $)
​1 ​Vancouver, Canada​ ​29.1% ​$7.56
​2 Beijing, China​ ​19.8% ​$9.78
​3 ​​Oakland, U.S. ​14.0% ​$9.96
​4 ​Seattle, U.S. ​13.4% ​$7.56
​5 ​Budapest, Hungary ​11.1% ​$6.87
​6 ​London, U.K. ​10.0% ​$22.35
​7 ​New Jersey, U.S. ​9.5% ​$8.26
​8 ​Tilburg/Eindhoven/Venlo, Netherlands ​9.5% ​$6.59
​9 ​Paris, France ​8.3% ​$7.45
​10 ​Manchester/Liverpool, U.K. ​8.0% ​$9.46
Top 10
Most Expensive Markets
(In US$ per sq. ft. per annum; as of Q1 2018)
​Rank ​Market​ ​​Annual Change (%) ​Prime Rents (USD $)
​1 ​Hong Kong, Hong Kong ​-1.3% ​$30.99
​2 ​London, U.K. ​10.0% ​$22.35
​3 ​Greater Tokyo, Japan ​4.5% ​$19.96
​4 ​Shanghai, China ​2.0% ​$10.51
​5 ​Stockholm, Sweden ​2.8% ​$10.29
​6 ​Singapore, Singapore ​-5.9% ​$10.16
​7 ​Oakland, U.S. ​14.0% ​$9.96
​8 ​Beijing, China ​19.8% ​$9.78
​9​ ​Munich, Germany ​2.9% ​$9.62
​10 ​Sydney, Australia ​3.9% ​$9.61
For more information, access the full report here.

About CBRE Group, Inc.

CBRE Group, Inc. (​​NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

In Canada, CBRE Limited employs over 2,000 people in 21 locations from coast to coast. Please visit our website at www.cbre.ca.​ 

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