Article content continued

On Oct. 24th, the Bank of Canada boosted its benchmark interest rate to 1.75 per cent, the highest it has been in almost a decade. The higher key overnight lending rate may “temper demand,” but it remains unclear to what extent, the report said.

The number of new strata projects in the region is the most the market has ever seen, said Bruno Fiorvento, an executive vice-president with JLL in Vancouver.

More than half of the buildings are getting built in Surrey and Richmond.

PC Urban’s IntraUrban Rivershore in Richmond is the largest of the new product at 264,000 sq. ft. The smallest is PortLiving’s 21,000-sq.-ft. project that was recently announced for 3333 Bridgway St. in northeast Vancouver near the Ironworkers Memorial Bridge.

PNG

Fiorvento said the new inventory will not be enough to take a bite out of the region’s critically low industrial vacancy rate, which currently sits at 2.1 per cent.

He said a balanced market requires roughly four per cent vacancy.

“I would say at least (another) two to three million square feet of space would have to come to the market in order to actually bring those markets back up to where they have to be,” Fiorvento said. “There’s just not the land to allow that to happen.”

Rising interest rates could pull some steam out of the market, said Rich Eastman, a senior vice-president, industrial, with Cushman and Wakefield.

“Right now, the demand is there, the prices are holding very, very well, but there is probably for a little bit of caution out there right now,” he said during a panel talk at the Vancouver Real Estate Strategy and Leasing Conference on Nov. 1.

Rates will continue to climb, he said. “Everybody knows that.”

He said most of the medium-to-large bay strata units have already been absorbed and the next way of inventory will mostly include small-bay configuration. “Going forward, I think we’re going to see some gains on the smaller-bay product.”

The price for 5,000 to 15,000 sq. ft. units have climbed by about 50 per cent in the last few years, Eastman said.

“But if you go back five or six years, they’re probably up 100 per cent, or pretty close to it in a lot of areas.”

evan@evanduggan.com

twitter.com/EvanBDuggan