Brent Sawchyn has noticed a familiar trend re-emerging after roughly eight years of developing the IntraUrban brand of strata industrial buildings in B.C.
Sawchyn, CEO of Vancouver-based PC Urban, is seeing the market lean back toward owners and occupiers buying more space than investors and often preferring simpler, more conventional industrial spaces.
“Whether it’s industrial (space), or buying a car, buying a home, shopping on Amazon or whatever . . . people are being a little bit more cautious about their purchases,” Sawchyn told RENX in a recent interview. “I think that’s been reflected particularly in the industrial space market.”
Most of that cautiousness is due to the high cost of borrowing. Sawchyn said market activity is now feeling like it did in 2016 when the firm launched its first IntraUrban strata industrial project on Laurel Street in Vancouver.
Back then, about 80 per cent of the buyers were owners who needed the space for their own businesses.
“As interest rates fell, through the pandemic in particular, we saw huge uptake of space by an investor crowd,” he explained.
“It seems like we’ve returned to what’s a more normal world with owners, users; real businesses buying industrial space, which I think is very healthy for our economy and healthy overall.”
A “consistent” market of buyers
What hasn’t changed over the years, and through 14 completed and ongoing IntraUrban developments, is who is using those spaces and for what purposes.
“It’s pretty consistent,” Sawchyn said, listing drywall contractors, electricians, tile companies, home improvement businesses and various other typical trades and distributors.
These are businesses owned by local people who have been around for a long time that want to own their space, he said.
Currently, PC Urban and its IntraUrban partner Nicola Wealth Real Estate are working on four projects. “Two are finishing up: one in Kelowna, and one in Langford,” Sawchyn said. “Both have been very successful.”
They are also selling and constructing:
- IntraUrban Southlands in South Vancouver, a three-building, 120,000-square-foot property which is 40 per cent sold;
- and IntraUrban Eagle Ridge, which comprises approximately 100,000 square feet in two buildings located in Coquitlam on Barnet Highway. That project is 30 per cent sold.
Still a market for traditional workspaces
Sawchyn says B.C.’s current economic turbulence seems to have buyers more focused on simplicity, predictability and traditional designs.
For IntraUrban, that means functional spaces with 24-26-foot clear ceilings, generous loading areas and easy access for trucks.
“We have seen others experiment more with stacked industrial space that’s a little more creative,” Sawchyn said.
“That is becoming a little bit more challenging in our market to lease and sell as we’ve returned to a more normal environment. With owners . . . we’re also seeing a decided appetite for conventional industrial space.”
Despite the ups and downs of the economy and elevated interest rates, demand for industrial space in Metro Vancouver has remained quite strong on the leasing and strata sides.
At the end of 2023, total industrial vacancy in Metro Vancouver was only 1.9 per cent, according to Avison Young’s year-end industrial report for the region.
The total availability rate had inched up to 3.9 per cent by the end of the year, providing some modest relief and space for companies to relocate, expand or start operations.
The last quarter of last year saw 2.1 million square feet of industrial absorption, while there is roughly seven million square feet of space under construction across 44 projects, the Avison Young report showed.
About 1.3 million square feet of that space under construction is strata with more than half designated as small-bay space.
Despite the rising vacancy, Metro Vancouver retains its title as one of the tightest industrial markets in Canada and the U.S., the report notes.
About PC Urban and Nicola Wealth
Founded in 2010, PC Urban Properties is a real estate development and investment company which has developed and launched real estate projects across all asset classes – retail, office, industrial and multifamily.
PC Urban is active throughout Metro Vancouver, the Central Okanagan and Southern Vancouver Island.
It has has developed over $2.1 billion of projects across all asset classes and currently has 2.4 million square feet of space under development including 700,000 square feet of office space.
Nicola Wealth Real Estate (NWRE) is the in-house real estate team of Nicola Wealth, a Canadian financial planning and investment firm with over $12.115 billion of assets under management.
NWRE sources and asset manages a growing portfolio of properties in major markets across North America spanning a diversified range of asset classes which include industrial, multifamily, rental apartment, office, self-storage, retail and seniors housing.
With the acquisition of Blackwood Partners, the NWRE portfolio exceeds $108 billion gross asset value.