Too much of Metro Vancouver's industrial lands used as underutilized parking

Surface parking lot outside an industrial building in Campbell Heights in Surrey. (Google Maps)

If the Metro Vancouver region is to address its economy-crippling industrial land shortage, among the many measures it needs to consider, it could look at how such properties dedicate a substantial amount of space for vehicle parking, which is under-utilized.

According to the newly released findings of a study by NAIOP, Bunt & Associates Engineering, and local developer Beedie, industrial sites across Metro Vancouver and the Fraser Valley are oversupplied with parking by 50%.

This is based on a survey conducted from June to October 2022 of 62 sites across the Lower Mainland with a mix of leased or strata industrial uses, which provided a picture of parking supply, peak parking demand, and usage patterns.

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The average peak parking utilization was highest for small-unit, multi-user strata industrial properties (53%) and lowest for small-unit, multi-tenant lease properties (41%). Single-user lease sites are the most common type of industrial property, but they had the lowest average peak parking demand rate and the lowest average observed parking supply rate.

The study notes that industrial sites within municipalities closer to the region’s Metro Core — downtown Vancouver and Central Broadway — generally have a higher parking utilization on average, with utilization rates reaching 70% on average for Vancouver properties and 63% in North Vancouver. Parking utilization was lowest in Richmond and Chilliwack, which averaged 32% and 34%, respectively.

Based on the findings, the transportation and planning consultants recommend municipal governments reconsider the minimum parking supply levels required for small, medium, and large industrial sites based on building size and proximity to public transit.

Separately, TransLink has indicated some of its highest ridership growth/recovery to date has been seen on bus routes that reach large industrial parks, such as Campbell Heights in Surrey.

If parking minimums are reformed and reduced, more industrial buildings could potentially be built to fill the spatial needs of companies looking to expand and/or open a presence in the Lower Mainland. Industrial lands account for 4% of Metro Vancouver’s overall land area but support 27% of the region’s employment.

“By working with municipalities to reduce excessive parking requirements on industrial sites, we can prevent pushing businesses out of the area,” said Carl Funk, director of industrial planning and development for Beedie, which is one of Metro Vancouver’s largest developers and owners of industrial space.

This industrial parking study is a follow-up report to NAIOP’s recent study in partnership with the Greater Vancouver Board of Trade, which was released in September 2023. With a years-long pattern of low vacancy rates for leased industrial spaces and an increasing shortage of industrial lands, the costs of using industrial lands in the region have skyrocketed.

Land costs have tripled in the last five years, and average costs per acre of industrial land are now about six times higher in Metro Vancouver than in the Seattle and Calgary areas. Metro Vancouver’s industrial lease rates are also amongst the highest in North America — the highest amongst Canadian urban regions and only comparable to Long Beach in the Los Angeles area.

Over the last few years, Metro Vancouver has lost an estimated 5.1 million sq ft of industrial businesses to Calgary, including companies that have left the region and others that have preferred to invest in Vancouver but were forced to choose Calgary. This also means thousands of high-paying jobs were not realized in Metro Vancouver.

It is estimated Metro Vancouver will need about 250 acres to 300 acres of additional industrial land on an annual basis, which is equivalent to 25% to 30% of the size of Stanley Park’s land area. This includes 80 to 100 acres annually for trade-enabling activities to support supply chains, such as the growing freight traffic through the Port of Vancouver.

Industrial lands are traditionally used for warehousing, distributing, manufacturing, and processing, but there are also growing uses for e-commerce, agriculture, and the region’s major film and television production industry. Increasingly, industrial lands closer to the Metro Core are being used for non-traditional industrial uses or redeveloped into residential uses.

According to CBRE’s market report for the second quarter of 2023, Metro Vancouver’s leased industrial vacancy rate reached a six-year high of 3% — up from under 1% for much of the past few years. Over 6.8 million sq ft of industrial space is currently under construction, including 2.9 million sq ft that is “design-build leased” and 1.7 million sq ft that is “speculative leased.”

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