Opinion: It’s time to get serious with industrial innovation in Metro Vancouver

Sep 10 2021, 6:06 pm

Written for Daily Hive Urbanized by Lilian Arishenkoff, the senior vice president of development for Wesbild in Vancouver.

Earlier this year, local retail star Aritzia released fourth quarter revenue numbers that likely earned some attention in e-commerce circles.

The Vancouver-born fashion retailer reported that its online sales revenue surged by 81% over the past year, fuelled by the pandemic e-commerce boom.

Surely Aritzia isn’t alone. Ecommerce in Canada has been supercharged since the pandemic took hold. Retail e-commerce sales will reach $86.52 billion this year, almost double 2019’s total, according to Emarketer. Growth this year compared to last is expected to be another 12%, the report said. By 2025, Emarketer predicts e-commerce sales will represent 17.2% of all Canadian retail sales.

All of these products need a place to be warehoused and distributed from to keep up with online demand. It’s part of a recipe that has worsened a critical squeeze on overall industrial space in the Vancouver region, which has vacancy plummeting, prices rising, and small and growing companies getting pinched out of the local market in what could become a major drag on the provincial and national economy.

This e-commerce boom and economic rebound means it’s time to get serious with industrial innovation and development in Vancouver. And mainly, that means we need more cooperation from policy makers to pave the way for more innovative, well located, stacked industrial buildings.

Strong demand keeps getting stronger

Vancouver’s overall industrial vacancy fell to 0.7% as demand continued to surge through the second quarter of this year. Meanwhile, asking lease rates climbed to $14.88 per square foot, according to Colliers. The expectation is that vacancy will continue to fall, while prices continue to climb. Colliers noted that vacancy has already reached an “unimaginable” level.

Another report shows similar findings. Cushman and Wakefield’s Marketbeat Industrial Q2 2021 report showed that BC’s energetic post-pandemic economy will see ongoing strength in the export sector and international capital investment, translating into expected growth of 6.4% this year.

Demand has exceeded supply in the regional industrial market for nine consecutive quarters, the report said. Despite many new construction projects, tenants and owner-users are having a hard time finding space to operate their businesses. Nearly 70% of new construction projects are already pre-leased or pre-sold.

Running out of land as demand surges

Much of the growth is arriving in the form of large-scale demand for warehouse, distribution and logistics space, pushing small and medium-sized businesses and expanding companies further east or out of space altogether

Smaller, family-owned businesses are facing fewer options and higher lease rates and this is putting a drag on the local economy while also creating a logjam for Canada’s busiest port, which could have national economic implications.

All of this comes as Vancouver struggles with fresh land to use for industrial space. Only 4% of the region’s land base is zoned for industrial usage, even though this space accounts for more than one quarter of all jobs in the region, according to Metro Vancouver Regional District. Our industrial lands over-contribute to the region’s economic health and provide essential trade, job space and tax income, but industrial land remains proportionally low here when compared to other major North American cities.

Let’s get smart, and stacked

Let’s be bold and confident; industrial space is changing and no longer is Vancouver’s industrial sector belching out smoke, pollutants and noise. Rather, our industrial base is increasingly focused on clean design, technology, office, food prep, film and distribution.

A key to regional industrial success is to prioritize innovative industrial solutions that are tailored for owner/occupiers and renters in urban nodes that are well connected to transit and amenities.

It’s also time for us to design, permit, build and market more stacked industrial complexes that climb higher and suit more variable uses. For instance, the market needs more tech and craft-forward industrial buildings that are blended with office space climbing to six storeys, or perhaps even higher.

Large-format stacked industrial buildings are already happening in parts of Asia and the US, including at Georgetown Crossroads in Seattle where Prologis has built a three-level warehouse with truck access to the upper levels.

Just as industrial designers and builders have had to adjust their work to meet the needs of the changing market, we encourage policy makers and regulators at the municipal level to be more flexible and innovative in their approach to stacked industry. These spaces and their users need the ability to evolve their businesses without the constraints of the standard industrial zoning. This would allow for more creativity and innovative uses to take place. That means more flexible approvals for height, parking and blurred lines between retail, office and light industrial.

It’s also important to build these mixed-use communities and spaces where people want to work and spend money. Limits on the restaurant and retail uses in these buildings thwart these spaces and deter businesses from moving in.

Developers and designers can lead us toward more innovative, high-density urban industrial developments and municipalities need to get on board with rezonings and approvals that lead to high density industrial clusters that match the needs of our future economy and the growing businesses of today.

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