The total dollar volume of industrial real estate sales activity in the Fraser Valley reached $465 million in 2017, a new record high beating the $396 million of 2015.
A report from Avison Young says that there were 244 deals, slightly down from 258 in 2016 (which was a record high) but demand remained strong and was constrained by lack of supply.
For the first three months of 2018, sales of industrial units in the Fraser Valley totalled $131 million from 47 transactions and the vacancy rate remained near record lows.
First-quarter vacancy in the Surrey (1%), Langley (1.5%) and Abbotsford (1.8%) markets were among the lowest in Metro Vancouver (1.8%), while new supply in Ridge Meadows (3.1%) provided some relief.
The tight inventory of available industrial real estate means average rental are achieving record highs. Although rates in Surrey ($9.11 psf), Langley ($9.67 psf) and Abbotsford ($9.17 psf) remained less than the Metro Vancouver average ($10.91 psf), the average rental rate in Ridge Meadows ($11.60 psf) was higher due to costs associated with new construction which accounts for a large share of the market’s supply.
Investors see positive returns
Institutional investors along with owner-occupiers are showing strong interest in the market.
“Both institutional and private investors are anticipating the continued appreciation of lease rates due to high land costs, tight vacancy and the ongoing availability of low-cost capital,” said Avison Young Principal Michael Farrell, who specializes in Fraser Valley industrial property sales and leasing. “The slow rise in interest rates and the foreshadowing of further increases to come in the near term has actually boosted demand as owner-occupiers and investors rush to get in while interest rates still remain at historically low levels.”