Vancouver’s industrial land shortage has reached ‘crisis’ level, report finds

Click to play video: 'Squeeze on industrial land costing Metro Vancouver thousands of jobs: report'
Squeeze on industrial land costing Metro Vancouver thousands of jobs: report
A squeeze on industrial land is costing Metro Vancouver thousands of jobs and millions of dollars in GDP, according to a new report. It comes as more firms are choosing to invest in places such as Calgary, where costs are lower and more land is available. Grace Ke reports. – Sep 13, 2023

Vancouver’s industrial land shortage has escalated to “crisis” levels, contributing to increased costs and lost job and revenue potential, a new report has found.

The city’s industrial land vacancy is about one per cent — among the lowest in North America, according to the study commissioned by the Greater Vancouver Board of Trade and NAIOP Vancouver, a commercial real estate advocacy group.

The average cost of land has tripled in the past five years, with average costs now roughly six times higher in Metro Vancouver than in Metro Seattle or Calgary, it adds.

“We are at a critical juncture. Right now we’re at a tipping point,” Bridgitte Anderson, CEO of the Greater Vancouver Board of Trade, told Global News.

“The kind of problem that we’re seeing in the lack of available rental housing is the exact situation we’re seeing in the lack of industrial land.”

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According to the report, one of the consequences of the shortage is that firms are leaving Metro Vancouver to neighbouring hubs in Alberta and Washington.

Over the past four-and-a-half years, it estimates the region has lost more than 5.1 million square feet of industrial land infrastructure development to Calgary alone, costing 6,300 jobs and nearly $500 million in GDP.

“At the same time, industrial businesses have grown in demand so much due to supply chain challenges as well as growth in consumer habits such as e-commerce creating a lot more demand for these properties,” said Jason Kiselbach, managing director for NAIOP Vancouver, in an interview.

“We’ve had dialogue with municipalities and provincial governments. This issue just hasn’t really been prioritized and until now, we haven’t quantified how productive industrial land is.”

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Click to play video: 'Possible solution for industrial land shortage in Greater Vancouver'
Possible solution for industrial land shortage in Greater Vancouver

Industrial land makes up four per cent of the total land mass in Metro Vancouver, but contributes to more than 450,000 direct and indirect jobs, and $50 billion in GDP, the report states.

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For every one per cent increase in land available for jobs and production in Metro Vancouver, the report suggests an estimated 126,100 jobs are created, and $12.2 billion in gross domestic product is generated for the province.

Twenty-seven per cent of Metro Vancouver jobs are located on industrial land, it adds.

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In addition to the lack of available industrial land, Anderson said the size or topography of the land that’s available poses another challenge for businesses.

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“Many of those parcels — it’s not feasible for it to become industrial land. It could be up a mountain, for example, without access to transportation and geographically constrained,” she explained.

“So those companies then are having to choose to move operations or to close down completely.”

The report makes three major recommendations to municipalities and the provincial government, including a re-focusing of land-use planning to prioritize local housing, production and local jobs. It also advises them to increase the protection and availability of industrial land in Metro Vancouver by examining non-productive lands that could be converted and to revise regional land-use plans every three years.

It calls on them to reduce red tape, rectify situations where industrial land is currently being used for non-industrial purposes, and better balance competing land-use priorities.

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No one at the City of Vancouver was available for an interview on this story on Wednesday or Thursday.

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In an emailed statement, however, director of city-wide and regional planning Chris Robertson said the city agrees with the report’s assessment of the land shortage, and is seeing more and more applications to build high-density buildings.

“Due to the high demand for industrial space, the vacancy rate is very low and rents are rising,” he said in an emailed statement. “Recognizing the critical need to address this scarcity, Vancouver City Council has made the protection and intensification of industrial zones a top priority.”

City zoning now allows for the construction of more intensely stacked industrial buildings, Robertson explained. He also pointed to recent zoning amendments in strategic areas, like the Broadway Corridor and around the Marine Drive SkyTrain station, that have increased boosted the ability to build high-density industrial buildings and industrial capacity.

“In alignment with Metro Vancouver, the City’s policies provide clear directives to safeguard existing industrial land and curtail speculative activities,” he wrote. “These policies are integral to addressing the current shortage and building a sustainable industrial future for our city and region.”

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B.C. Minister of Jobs, Economic Development and Innovation Brenda Bailey said the provincial government is well aware of the shortage too, particularly in the Lower Mainland, and working with all levels government on solutions.
“We have been working diligently since we formed government to create an economic environment that allows businesses to succeed,” she said by email.

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“This includes cutting the small business tax rate, providing more than a half billion dollars in grants to help businesses get through the pandemic and creating workforce development programs like our StrongerBC: Future Ready Action Plan. We also created the new, $180-million BC Manufacturing Jobs Fund, which is supporting high-value industrial and manufacturing projects that create and protect good jobs throughout the province.”

“Through the StrongerBC Economic Plan, we’re building an innovation-based economy for the future, and making sure people have the skills they need to keep our businesses and the province strong and moving forward.”

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