The shortage of industrial land in Metro Vancouver has reached alarming levels, threatening not only the region's economic health but also its ability to attract and retain businesses. After several years of soaring demand, where industrial real estate’s vacancy rates plummeted below zero, the market has recently softened. But even with slight changes to the market dynamics, the underlying issues of supply inadequacy persist, limiting opportunities for warehousing, distribution, and technology-driven businesses.
Jonathan Cote, deputy general manager of regional planning and housing development at Metro Vancouver, emphasized the need to protect existing industrial lands. "The big focus is re-emphasizing the importance of this land and the risks of losing it," he stated. Indeed, as revealed by the latest report from Metro Vancouver released earlier this week, the economic significance of industrial land cannot be overstated. With over 4% of the region’s total land area dedicated to industrial use, these areas are responsible for supporting approximately 22% of the region’s jobs.
Despite achieving record high rental rates, with the vacancy rate rising to over 3% for the first time since 2015, the situation still signals distress as many businesses seek locations beyond the region. Rising costs and limited options are pushing firms to turn their eyes toward Calgary, where available land and lower operational costs are attractive alternatives. Cote remarked on this trend, mentioning how it’s important to be aware of the relocation dynamics compounding the challenges faced within Metro Vancouver.
The absence of sufficient industrial facilities could have dire consequences. According to statistics from Avison Young, industrial lands directly support 315,300 jobs and indirectly contribute to vast employment across British Columbia. With these jobs paying about 14% higher than typical non-industrial roles, it’s clear how these lands are integral drivers of the economic engine. A recent study indicated the lost opportunity costs for Metro Vancouver could translate to 6,300 direct jobs, $477 million in wages, and $828 million in economic output over five years, showcasing the latent potential of industrial lands.
Further complicate matters is the report from InterVistas Consulting Inc., which showcases how industrial lands contribute approximately $8 billion annually to tax revenues, supporting public services across multiple levels of government. This astonishing figure highlights just how pivotal industrial prosperity is for local communities, as Mike Hurley, chair of Metro Vancouver’s board of directors, noted: "This new research quantifies what many have long understood: industrial lands punch far above their weight in the economy."
But the pressing issue doesn’t just remain with job figures or economic output. The impending doom hangs over local businesses as the existing supply of industrial lands is on track to be fully utilized between the years 2035 and 2047 according to the Board of Trade report. The ramifications could force businesses to shutter their doors entirely or relocate, resulting in accelerated economic decline and loss of careers. The interconnectedness of various industries with industrial lands necessitates urgent action to safeguard these economic assets.
Increasingly expensive operational costs tied to industrial land have led to incredibly low vacancy rates, making it exceedingly challenging for new or existing businesses aiming to set up operations within the Metro Vancouver area. The combination of limited availability and steadily rising rental rates has exacerbated the situation. "Metro Vancouver has faced a…critical shortage of industrial lands for over a decade due to…low vacancy rates and rising rental costs," stated the report's authors, capturing the severity of the dilemma.
Cote explained there are initiatives through the regional growth strategy aiming to spearhead major developments within urban centers to alleviate some pressures on industrial lands. There's also discussion surrounding the reevaluation of industrial land usage to primarily support activities generating jobs as opposed to allowing non-industrial activities to shuffle onto these strategic lands.
To counter the disparities, recommendations from national and regional trade boards endorse increasing industrial zoning to fulfill the demands amid employment and manufacturing desires from businesses. It’s become clear from studies and reports alike: the importance of industrial lands is immense, and their secure future is integral to preserving overall prosperity for Metro Vancouver and its residents.
If action isn't taken now, the long-term economic impact could be devastating. Businesses may face the choice of adapting to less favorable settings if the balance does not shift soon.
