The rate to lease industrial and logistics space in Vancouver saw an increase of 29.1% in the first quarter of 2018, making it the largest increase in the world for these type of spaces.
CBRE’s recently released Global Industrial and Logistics Prime Rents report notes that a lack of vacant supply and high demand is behind the high year-over-year growth, which was an all-time high for the city.
In contrast, the global average increase was just 3.2% year-over-year. Neighbouring Seattle and Oakland also saw significant growth at 13.4% and 14%, respectively, for reasons like Vancouver’s market, with limited supply and strong demand for third-party logistics, food distribution, building supplies, and consumer goods.
In Vancouver’s case, the shortage is further exacerbated by the booming film industry’s need for large production studios in warehouse-like spaces.
While Vancouver saw the largest growth increase, it was far from having the world’s most expensive rates for industrial and logistics space.
With USD $7.56-per-sq-ft, Vancouver ranks 25th, well below the top three most expensive markets: Hong Kong (USD $30.99), London (USD $22.35) and Greater Tokyo (USD $19.96).
“These price increases are a result of continued dwindling industrial supply, doubling occupier demand and continued growth of Vancouver’s population,” said Jason Kiselbach, Vice President and Sales Manager at CBRE Vancouver, in a statement. “This is a testament to Vancouver’s growing economy and strong retail consumer spending. Industrial users understand the value of having port access and proximity to a growing population that is increasingly demanding expedient delivery of products and services.”
“This should, however, serve as a wake-up call for the smaller, family-owned, industrial businesses that have seen, not only an increase in rental rates but in a number of other costs as well, including property taxes, wages and transportation. These businesses need to consider locking in rates now with early, long-term renewals to hedge against further cost increases.”
Fastest growing global markets for industrial lease rates
- Vancouver, Canada (annual change +29.1%; prime rent USD $7.56)
- Beijing, China (annual change +19.8%; prime rent USD $9.78)
- Oakland, US (annual change +14%; prime rent USD$9.96)
- Seattle, US (annual change +13.4%; prime rent USD $7.56)
- Budapest, Hungary (annual change +11.1%; prime rent USD $6.87)
- London, UK (annual change +10%; prime rent USD $22.35)
- New Jersey, US (annual change +9.5%; prime rent USD $8.26)
- Tilburg/Eindhoven/Venlo, Netherlands (annual change +9.5%; prime rent USD $6.59)
- Paris, France (annual change +8.3%); prime rent USD $7.45)
- Manchester/Liverpool, UK (annual change +8%; prime rent USD $9.46)
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