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Metro VancouveIndustrial Repor

Fourth Quarter 201

www.dtzvancouver.com

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Metro Vancouver Industrial ReportFourth Quarter 2010

Signifcant industrial leases o Q3 2010

Address Municipality Size (sq t) Tenant

927 Derwent Way Delta 155,000 Euro-Asia Transload

3023 188th Street Surrey 132,000 Cold Logic Pty Ltd.

7530 Hopcott Road Delta 116,570 Northgate Terminals Ltd.

917 Cliveden Avenue Delta 115,646 Merlin Plastic Supply Inc.

16131 Blundell Road Richmond 111,000 Kuehne & Nagel Ltd.

Economic Summary

Despite a steady, i slightly rocky 3rd quarter, Canada’s economy

has recovered to pre-2008 levels as investors have regained con-dence, a trend that is evidenced in the increase in constructioninvestment and increases in permit applications.  Non-residential

permit were up 26.7% in September, ollowing a 24.2% decline inAugust.  Total new construction investment was up to $10.55 bil-lion, up rom $10.02 billion last year (a 5.3% increase) and up 2%

rom last quarter’s $10.34 billion.

Employment ollowed similar trends with a drop to the end o thequarter, but regaining its ooting into the 4th quarter.  Due to the

start o quarter downturn, Canada only averaged about 5700new jobs and most o these were regained in October and No-vember.  This is down rom the average o 51000 in the rst hal 

o 2010.  Unemployment held steady, but is still up 2.2% rom thistime last year.  Construction employment ell 27,000 in December,

but is still up 4.8% rom last year, and with new investment intoconstruction, employment prospects look good.

Metro Vancouver Market Summary

The Metro Vancouver Industrial Market had a steady quarter, withsales up signicatly, and vacancy down.   Industrial sales con-

tinued their recovery, up to a total o $171,000,000 this quarter,a large increase rom last quarter’s $135,000,000, but still shy

o last year’s $194,000,000.  Vacant space across the area ellto 7,834,656 square eet (4.26%) down 46 basis points rom last

quarter’s 4.72%.  Strata and small box spaces continued to drivethe market.

Despite the drop in vacancy, the large increases in supply overthe last ew quarters have ensured that prospecting tenants have

many options.  This has had a lowering eect on rental rates,to the point where in some areas the rates have reached 2006levels.

Larger box spaces continued to have issues moving, many o 

which have been sitting on the market or up to and over a year.Small to mid range (2000 - 20000 square eet) product continues

to drive the Metro Vancouver Market.

Vancouver • North Vancouver • Burnaby

The City o Vancouver saw a busy quarter.  Vacancy rates de-

creased considerably, down 109 basis points rom last quarterto 2.79%.  Vacancy dropped airly sharply in Vancouver rom

3.88% to 2.79%.  Once again, much like the rest o the GVRD,North Vancouver had a airly busy quarter, with the vacancyrate dropping a ull 243 basis points to 1.47%.  The new supply

at the Dollarton Business Park sold quickly, and in North Van-couver’s historically static market this is not surprising.  Brand

Municipal Vacancy Rates

Source: DTZ B

Source: DTZ Barn

Source: DTZ Barnicke 

Historic Vacancy and New Supply

4.26%3.65%

3.15%

9.12%

7.29%

1.47%

3.72%

1.47%

2.28%

3.29%

4.04%

2.79%

Ov e r a l l 

B ur na b y 

C oqui t l a m

D e l t a 

L a n

gl e y 

Ma pl e  R i d ge 

N e w We s t mi ns t e r 

N or t h  V a nc ouv e r 

P or 

t  C oqui t l a m

R i c h mond 

S ur 

r e y 

V a n

c ouv e r 

Increase in va

Decrease in va

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010YTD

(Millions of Sq Ft)

New supply

Vacancy rates

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Metro Vancouver Industrial ReportFourth Quarter 2010

Metro Vancouver industrial statistics Q4 2010

Region Total inventory (sq t) Total vacant (sq t) Vacancy rate Average asking lease raPSF* (NN

Abbotsford 5,033,248 127,159 2.53% $6.

Burnaby 27,259,152 995,915 3.65% $8.

Coquitlam 8,564,142 269,960 3.15% $8.

Delta 21,698,012 1,979,186 9.12% $7.

Langley 15,508,095 1,130,175 7.29% $7.

Maple Ridge/Pitt Meadows 2,087,572 30,689 1.47% $8.

New Westminster 3,923,000 145,985 3.72% $6.

N. Vancouver 4,770,387 70,046 1.47% $13.

Port Coquitlam 8,521,663 194,523 2.28% $8.

Richmond 34,229,972 1,127,080 3.29% $8.

Surrey 28,891,515 1,168,021 4.04% $8.

Vancouver 23,558,246 657,258 2.79% $10.

Total 184,045,004 7,895,997 4.27%

Source: DTZ Barnic

new industrial space in North Vancouver is a rare occurrence.

However, the lack o possibilities or new supply has and willcontinue to have a infating eect on rental rates.  For average

industrial space, more than 2/3rds o available spaces in NorthVancouver is over $10 per square oot.  Like the rest o theGreater Vancouver area, owners are having a hard time leasing

out larger spaces, however due to their rarity in North Vancou-ver, the rental rates are still high and going up.  While there has

been new construction, it does not seem to be enough to keepup with demand.  Most o the new supply is coming to the

market ully leased or sold.  Q4 saw about $12,118,410 in sales,up rom $4,702,000 rom last quarter.  This is largely due to thesale o the strata units in the new Dollarton Business Park.

Burnaby had a busy quarter in terms o supply.  It was one

o the ew areas in the Greater Vancouver Area that had anincrease in vacancy, i only slightly, up 30 basis points rom lastquarter to rest at 3.65%.  This is due to the act that Burnaby

was home to the largest number o completed projects thisquarter.  New supply at the North Fraser Corporate Centre,

Burnaby Business Park and Glenwood ensured that the cityo Burnaby kept just one step ahead o the demand.  This new

supply has also had a dampening eect on rental rates, bring-ing them down to rates last seen in 2006.

Northeast Sector • Ridge Meadows

Much like the rest o the Greater Vancouver area, the Tri-Cities

saw a airly steep drop in vacancy rates.  This was largely dueto 91-93 Glacier Street being taken o the market when it wasleased to Uni-Select Pacic.

The Ridge Meadows area saw very little activity in the 4thQuarter.  Vacancy dropped o slightly as 17,000 square eet

was taken o the market

Richmond • Delta

Richmond saw a strong sales activity this quarter ueled by de-

mand or small bay spaces (2,000-10,000 square eet).  Despia large volume o new supply, prices and lease rates have continued to rise in the area.

Total vacancy in Richmond increased by 47 basis points to reac

3.79%.  Delta has also seen an increase in vacancy by 147basis points to 9.29%.  Both cities have seen a large amount o

new supply (over 300,000 square eet this quarter), which hascontributed to these rates.   Following the regional trend, largspaces have had trouble attracting interest.  This has particula

aected this submarket due to the number o larger bay proper-ties that came on the market this quarter (20,000 to 100,000

square eet).

Surrey • Langley • Abbotsford

The Fraser Valley saw slow activity, and some new supply in the

4th quarter.  Small to mid size spaces drove much o the mar-ket’s activity.  Due to continued oversupply, the Valley once ag

saw an slight increase in vacancy, up 13 basis points rom 4.69%to 4.82%.

Abbotsord saw a slight decrease in vacancy, dropping 13 basispoints rom 2.66% to 2.53%.  This occured despite the nearly

100,000 square eet o new supply that came with the comple-

tion o the Maclure Business Park, and the 40,000 square eetat the Queen Street Business Park. Langley also saw a slight dip

in vacancy, alling 16 basis points to sit at 7.29%.   Surrey waone o the ew locations to see an increase in vacancy, but this

was due, in large part, to 190,000 square eet that came on themarket at 1125 124th Street.

 

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Metro VancouveIndustrial Repor

Fourth Quarter 201

Top industrial land sales o Q4 2010**

Address Municipality Size (acres) Price Price/Acre Profle Purchaser

12100 Hartnell Road Richmond 21.3 $21,000,000 $985,915 Government City of Richmond22650 Fraser Highway Langley 7.5 $6,152,559 $860,112 Investor Tall Crane Equipment LtdLot 3 Townline Road Abbotsford 12.69 $4,902,000 $386,167 Government City of Abbotsford

9712 190th Street Surrey 2.33 $3,150,000 $1,354,839 Investor Two Pillars Holdings

Top industrial sales o Q4 2010**

Address Municipality Size (sq t) Price Price/sq t Profle Purchaser

1700 No. 6 Road Richmond 205,170 $14,700,000 $72 Investor Hungerford Group

70 Golden Drive Coquitlam 52,000 $8,500,000 $163 User Smithrite Disposal ltd.

12280 Trites Road Richmond 70,417 $7,775,000 $110 Developer Southstreet Development

Unit 4&5 7978 North Fraser Way Burnaby 37,101 $5,204,500 $140 Investor 08889862 B.C. Ltd.201-217 West 6th Avenue Vancouver 19,540 $4,580,000 $234 Investor Red Spruce InvestmentsUnit 1, 7978 North Fraser Way Burnaby 29,039 $4,319,084 $149 Investor Wyatt Holdings Inc.

VANCOUVER • Victoria • Nanaimo • Kelowna • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Burli• Haliax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo

DTZ’s extensive global reach consists o over 12,500 people across 150 cities in 45 countriesAll inormation has been obtained rom sources considered to be accurate but is not guaranteed and is subject to conditions at the time o any transaction taking place.

P ti b itt d bj t t i l l ithd l h ith t ti

For more inormation please contact:James Fraser, Director o Researchjames.raser@dtzvancouver.com(604) 630 3405

DTZ Barnicke

Industrial Team

Casey Bell

Steve Caldwell

Tony Capolongo

Don Mussenden

Mitch Ellis

Mark Elworthy

Anthony Lux

Chris McIntyre

Ryan Saunders

Rand Thomson

Defnitions

Absorption: Reersgrowth or net chanin occupied spaceover time.

Inducements: A oo monetary enticement given by a lalord to a tenant.

New Supply: New

space entering themarket through neconstruction.

Under ConstructioProjects that are crently being built bare not yet comple

Vacancy Rate: Thecurrent amount o vacant building arecompared to the toamount o existinginventory.

DTZ Barnicke Vancouver Limited800 - 475 West Georgia Street, Vancouver, B.C. V6B 4M9Tel: (604) 684 7117   Fax: (604) 684 1017

**Data sourced rom

RealNet Canada Inc.

www.realnet.ca

If you would like to receive this report via email,

please contact us.

*Properties over 10,000 sq

Looking Ahead

• ●While there was little new supply thisquarter, there are a number o projects

that are aiming or completion in theSummer & Fall o 2011.  This means that

rates will increase as supply decreases,leaving the market primed or new supply

to pull in the highest possible lease rates.These conditions have created a competi-tion among developers to see who can

nish rst, and which will be the next bigoce/industrial development completed in

Vancouver.

• ●Since economic conditions are not

recovering as quickly as some hoped,investors will continue to be careul.  While

we expect investor interest to continue toincrease, the rocky economic conditions

o the last couple years continues to stuntinvestment and new construction.

• Despite the continued new supply, themarket demand has surpassed what de-velopers have been able to provide.  Thishas resulted in low vacancy rates, butdue to the continued new supply, and o-ten stable vacancy rates, we expect therental rates across the Metro VancouverMarket may continue to drop or averagewarehouse space, and increase or small,

quality, fex strata space.