The boom in Victoria’s real estate and construction sectors could push industrial rental rates up in the new year, says a local industry expert.
Ty Whittaker, senior vice president of Colliers International Victoria, said industrial rental vacancies have decreased last year, with more businesses choosing to set up shop in Victoria.
In the past five years, the industrial vacancy rate has decreased from 5.69 to 4.88 per cent, which Whittaker said is a byproduct of the city’s booming real estate market and commercial contractors keeping busy.
“There’s definitely demand out there. We all live and die off our residential market, quite frankly, and because the residential market is going along so strongly, we’ve got more cranes in the sky than we’ve ever had,” said Whittaker, who is involved with industrial sales and leases, such as warehouses, and business parks, as well as land development sales in Victoria and the West Shore.
According to the Victoria Real Estate Board, the city’s housing market is coming off record-breaking numbers. In 2016, there were 10,722 properties sold, exceeding the previous high of 9,241 sales in 1991. Those numbers are expected to increase in the coming year as well, all of which is benefitting a number of other sectors.
“All of that has a trickle down affect to the cabinetry guys, the countertop guys, the contractors, roofers,” said Whittaker, adding the cost of living continues to be a factor in why businesses are coming to Vancouver Island.
“They’re all very, very busy and with that there’s expansion taking place within our business parks and it promotes health in our economy.”
Technology businesses continue to be one of the major industries choosing to move downtown. Many are also moving to business parks, such as Rock Bay and Goldsteam Meadows in the West Shore.
Looking ahead to the rest of the year, Whittaker believes industrial rental rates, which are roughly $12 a square foot net, will increase.
“For the last five years, tenants have been in the drivers seat. They had two or three options where they could negotiate. Now landlords are finding they might be the only option in town and that will certainly push rental rates back up again,” said Whittaker.
Whittaker, along with Darlene Hollstein, Anne Tanner, and Victoria Real Estate Board president Mike Nugent, recently participated in a panel discussion about the development and real estate markets and the forecast for 2017.
The event was put on by the Urban Development Institute Capital Region earlier this week.