Vancouver’s industrial vacancy rate continued to rise in the third quarter but remains among the lowest in major Canadian cities, says a new Avison Young report.

The third quarter of 2024 saw industrial vacancy rates increase to 3.1% on average, a 20-basis point rise from the previous quarter and the ninth consecutive quarter of rising vacancies. Despite the increase, Vancouver’s vacancy rate is still low compared to historical figures, which ranged from 0.3% in Q2 2022 to a high of 4.7% in Q1 2010.

Rental rates have seen a mixed performance over the past year. The average net rent declined 2.8% quarter-over-quarter, falling to $20.74 per square foot (psf) in Q3 2024 from $21.99 in the same period of 2023.

Despite this dip, gross rental rates have remained relatively stable at $27.14 psf, only slightly down from $27.29 at the same time in 2023 due to rising additional rent costs. Notably, North Vancouver and Vancouver proper remain among the highest-priced submarkets, with gross rents exceeding $30 psf, at $32.32 psf and $30.83 psf respectively.

The report also noted a growing disparity in rental rates between class A properties and older, less desirable buildings.

On the supply side, the market saw a limited number of new project completions, with just 196,709 square feet delivered this quarter, significantly below the average of 1.5 msf over the past two years. However, construction activity remains robust, with 13 new projects breaking ground in the third quarter, marking the highest total area under construction in the past year.

Of the 61 projects currently in progress, nearly 28% of the 7.1 msf is dedicated to strata developments, a sharp increase from 19% in Q3 2023. The proportion of presold under-construction strata units also rose, to 34% by September from 20% in January 2024.

For larger tenants seeking spaces of over 100,000 sf, there are currently 18 available options in the market, compared to just 13 a year ago and only two three years ago, reflecting the increasing availability of large-scale industrial spaces.

But total availability remained unchanged quarter-over-quarter at 3.9%.

The market experienced 384,777 sf of negative absorption.

In notable leasing deals, Euro Asia Transload renewed its 149,558-sf lease at 16100 Blundell Road in the Vancouver suburb of Richmond, B.C., and Olympia Transportation signed a new lease on 128,628 sf in Delta, B.C..

Photo: Courtesy of Avison Young