British Columbia

Metro Vancouver running out of industrial land

Metro Vancouver could run out of available industrial land much sooner than previously predicted, according a new report, and that could change the face of the region's workforce.

A shortage of industrial land could affect everything from economic growth to jobs

G3 Holdings has proposed to build a new grain terminal in North Vancouver, but real estate experts say the region is experiencing a critical shortage of available industrial land that is thwarting similar large projects. (g3terminalvancouver.ca)

Metro Vancouver could run out of industrial land much sooner than previously predicted, according a new report.

The region already has the lowest availability of industrial land in North America, according to the study by the commercial real estate firm CBRE Group. 

At 2.7 per cent, the availability rate is now well below the previous record low of 3.8 per cent for the region, says CRBE vice president Chris MacCauley,

"At these low vacancy rates it really affects everybody, from the little small businesses ... all the way up to the big distribution companies that service the port."

And with construction, manufacturing, film and e-commerce booming in the region, he expects demand for large industrial spaces to continue to outpace supply into the future.

In 2015 a Metro Vancouver report forecast the region could run out of industrial land by 2038.

But if the current trend continues, "We'll be in a critical state in less than ten years," says MacCauley. "Some would argue that we are already in critical state now."

"What will happen is it will stifle our economic growth going forward. These companies don't have opportunities to grow. New companies don't have opportunities to come into our market."

Tight supply at any price

The issue, says MacCauley, is not the price of land, but just being able to find land at any price that is close enough to existing highways and the port to meet industry demands.

"Right now the large scale distribution companies are at a critical state. Any large distribution or industrial clients cannot find a home," he says.

He points to Molson Coors, which was forced to relocate to Chilliwack after selling its Vancouver brewery to a residential developeper.

After Molson Coors sold its brewery site near downtown Vancouver to a residential developer, it was forced to relocate to Chilliwack for a space to build a new facility. (CBC)

 At UBC, Sauder School of Business professor Tsur Somerville agrees the shortage of the right kind of land is a concern.

"Vancouver has land zoned industrial but it doesn't meet the kind of uses people want. Land in Vancouver at Knight Street and Marine Drive is not where people want to put a large warehouse space."

"They need a large amount of land where it is easy to move trucks in and out. You want it near Highway 1."

Solutions are also hard to find

Both MacCauley and Somerville agree finding a solution is challenging.

MacCauley is calling on provincial and municipal leaders to make more land available for industrial use, but notes he is not calling for the creation of new industrial parks.

"I think we need to look at our existing industrial parks and how can we expand those," he said.

And he does not rule out the hot button issue of freeing up some of the land in the Agricultural Land Reserve.

"I think we need to have a conversation with the ALC to have a look at what the needs of the agricultural land community are, and what the needs of the industrial land community are, to help both their growth."

Plans for a massive truck park in Surrey were shelved in 2015 after opponents argued a fuel spill would pollute nearby salmon-bearing streams and the local aquifer. (City of Surrey)

Somerville said municipalities need to find ways to make developing industrial land economically feasible.

"We face a real squeeze between the ALR and the high prices that people are willing to pay for residential land that can make the economics of industrial space very difficult."

"Simply letting the market control land use could mean the city will end up with a lots of expensive homes, but not many jobs."

He says local leaders need to ask what kind of city they want to have.

Sommerville said, "Warehouses don't make for cool, walk-able neighbourhoods, but they are important to have nonetheless."

"If you don't have good blue collar jobs available, then you don't have that in your city. I think there is a lot to be said for having a city that is a good mix of jobs and people."

About the Author

Mike Laanela is an online journalist with CBC News in Vancouver.