Metro Vancouver’s industrial real estate market has shifted from investors and large logistics companies clamouring for properties, which drove down vacancy numbers and pushed up lease rates
Vancouver neon artist Doug Cochran used to rent out a garage in someone’s backyard to serve as his workshop and a place to store his supplies and creations.
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Before that, he rented a floating house in Richmond.
But he recently tried something different. He bought a 600-sq.-ft. industrial strata space that is on the fourth floor of one of two six-storey stacked industrial buildings that make up the new Marine Landing development in south Vancouver.
Instead, there’s a new micro-trend of small-business owners like Cochran buying so-called stacked strata properties.
For the past few years, investors saw how companies such as Amazon and others were expanding and coveting Metro Vancouver industrial space. The already low vacancy rate dropped to as tight as just 0.35 per cent and average asking rates per square foot hit all-time record highs.
This phenomenon, along with low interest rates, led local business owners to consider buying strata industrial properties, according to Ryan Kerr of Avison Young, who specializes in industrial leasing, sales and land sales throughout Metro Vancouver.
“Starting this fall, these buyers started coming to the market. They want to own, and the developments with better designs and locations are seeing the most demand.”
Of the 61 industrial projects under construction in Metro Vancouver, 28 per cent are strata developments, up from 19 per cent the previous year, according to Avison.
Cochran learned from Andrew Hibbs the nuances of pumping inert gases into glass tubes to create different colours and how to heat portions of the glass tubes so they are pliable and can be bent and shaped.
He was hooked and, since then, the dabbling has grown into a neon artwork business. Cochran is hoping to use his new, larger, permanent space both as a place for creating his pieces and displaying them for clients.
“You can either put one Walmart there,” Cochran said the building, “or you can make space for hundreds of smaller (businesses) — either artisans or small businesses or architects or whatever.
“You can hollow out the city so that the only thing left are chain stores or retailers or you can make a vibrant space where smaller artisan-type groups can survive.”
Derek Newcombe, owner of Salty Buoy Marine Canvas, which makes custom coverings for sailboats, powerboats and yachts, is looking forward to his new space in the same development. It will allow him to lay out a complete project all at once instead of cutting, sewing and working with patterns in several steps as he was doing in a smaller space.
While more traditional industrial spaces can be many thousands of square feet, all on the ground floor with big loading bays for trucks, the stacked industrial developments offer a range of spaces with smaller freight elevators. Some are mixed with office strata units on upper floors.
“It’s a relatively new concept and the designs have been refined. As developers understand the needs of owner occupiers, they will be more functional and attract sales because of that,” said Kerr of Avison Young.
Among the raw materials that Newcombe uses are stainless steel tube frames, the shortest of which are six metres long, making it hard for them to fit into the freight elevators. He’s found a way to arrange storing them vertically inside his space, using the ceiling rafters.
But when it comes to bending these tube frames and shaping them for the coverings he makes, the raw pieces are too long for the room. So he has to arrange it so “half the tube goes out the door,” while he works with the other half, and then repeat the process again.
Chuckling to himself at the slightly cumbersome tactic, he said the value in having the space “far outweighs the number of frames I bend a year.”