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Industrial jobs pay 14 per cent higher on average but high costs and few options are pushing new and existing businesses to seek locations outside of B.C.
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After several years of a white-hot industrial real estate market in Metro Vancouver, with vacancy rates dropping below zero and record-high rental rates, there has been a softening in the last few months.
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However, the supply of industrial land, which boasts intense economic value, is still insufficient to accommodate all the needs for warehousing, distribution, manufacturing, processing, local production, and new emerging technology-driven businesses.
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“The big focus is re-emphasizing the importance of this land and the risks of losing it,” said Jonathan Cote, deputy general manager of regional planning and housing development at Metro Vancouver.
On Monday, the region released a new study on the economic value of industrial lands, updating information from the last report, which was conducted in 2019.
Cote said it is important to understand that high costs and scarcity of options are pushing new businesses wanting to be located in western Canada, or existing businesses that want to expand, to seek places outside the region and province.
In particular, they are heading to Calgary, which offers lower overall costs, abundant land and strong transportation options.
“It seems to be a destination, and it’s important to be aware of this dynamic,” said Cote.
In the last quarter of 2024, the industrial land vacancy rate in Metro Vancouver increased to above three per cent for the first time since 2015, according to global commercial real estate advisor Avison Young. That rate is still considered very low.
Demand moderated slightly as interest rates increased, there was more economic uncertainty and expensive building costs, and more people worked from home after the pandemic. Rental rates dropped 5.2 per cent year-on-year. The overall slowdown allowed the market to absorb available space.
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Despite this, it is still the case that industrial lands account for just four per cent of the total land area, but these areas support some 315,300 jobs, or 22 per cent of the region’s total, according to the new Metro Vancouver report.
Of the 444,700 industrial jobs in the region, nearly 42 per cent, or 186,1000 jobs, were on industrial lands, while the remaining 258,600 industrial-related activity jobs were located on other lands. In total, these jobs represent 31 per cent of total jobs in the region.
Industrial jobs pay 14 per cent higher on average than non-industrial jobs, according to the report, which said that in 2021, industrial jobs paid on average $67,900 compared to $59,500 for non-industrial jobs. Inflating to 2024 dollars, the average industrial job on industrial land equaled $76,800.
The report also highlighted that businesses in other sectors need to be connected to industrial activities and that they depend on each other. For example, construction companies need supplies like concrete and steel from industrial lands. E-commerce retailers such as Amazon and others have to have industrial lands for warehousing and distribution.
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In 2023, the Greater Vancouver Board of Trade also looked at the economic value of industrial land. It said the opportunity loss for the Metro Vancouver region was approximately 6,300 direct jobs, $477 million in wages, $494 million in gross domestic product and $828 million in economic output over a five-year time frame.
That study estimated that for every one per cent increase in land available for jobs and production, an additional 126,100 jobs are created and $12.2 billion in GDP is generated for B.C. These jobs would provide above-average salaries and would substantially increase local production, manufacturing, and support local industries.
The acute lack of industrial land in the region and its importance for economic activity means that the current five-year review cycle of the inventory could be too long, the study said, recommending shortening the review cycle to two to three years.
Surrey, Richmond, Burnaby and Delta, in this order, have the largest total inventory of industrial land by square feet.
jlee-young@postmedia.com
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