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The world’s largest cities are staring down the barrel of a dilemma: Unprecedented demand for same-day delivery is adding pressure to tight industrial real estate markets, where land is scarce and rents are rising.
Cities like Hong Kong, Singapore and Tokyo have turned to mixed-use, multi-storey facilities that allow businesses to expand their delivery capabilities in major urban hubs. Now, the trend has come to Canada.
Vancouver will house the country’s first multi-storey industrial building and CBRE has gathered everything you need to know about this groundbreaking development.
Vancouver Leading the Charge
Vancouver’s industrial availability rate has dropped from 5.9% in Q3 2015 to just 2.4% in Q4 2019. With more businesses competing for less space, average net rents have shot up from $8.26 to $13.15 psf during this timeframe.
Record demand has pushed developers to move forward with bold ideas.
Oxford Properties Group has worked through the details and announced a two-level industrial project in Burnaby, slated to begin construction in the new year. This will be Canada’s first multi-level industrial building with full transport truck access to an upper floor.
The 437,000 sq. ft. ground floor will feature 32-foot clear heights, while a 270,000 sq. ft. second floor with 28-foot clear heights will be accessible to transport trucks via a ramp.
Meanwhile, Vancouver-based developer Wesgroup Properties is planning its own two-storey facility in the nearby city of Coquitlam. This project will feature a 121,000 sq. ft. ground floor and 80,000 sq. ft. second level, accessible to smaller transport vehicles.
Tight Markets, New Pressures
Of course, Vancouver isn’t the only market facing these pressures. Consumers in urban centres have come to expect the delivery of “last-mile” goods from an expanding pool of retailers.
As the demand for same-day delivery grows, so does the need for distribution and logistics centres close to major metros.
Acquiring land in sought-after markets can come with a hefty price tag, but some companies are betting the cost will be outweighed by a shorter delivery distance.
A Worldwide Trend
While Vancouver is the first Canadian city to launch a multi-storey industrial building, similar market constraints have led to the construction of three in the U.S alone.
Innovo Property Group completed a three-storey warehouse and fulfillment centre in Seattle for same-day delivery, while Goldman Sachs + DH Properties have built their own three-storey building in Brooklyn, and Prologis has a two-storey “last-mile” space in the Bronx.
As Canadian consumers continue their love affair with ecommerce, the multi-storey industrial trend is likely to expand to other cities. Knowing where this type of building will be built next, and how this trend could impact your business, is key.
CBRE offers the most comprehensive industrial real estate services platform in Canada – let us help you build advantage and grow your bottom line.