Cedar Coast, a developer in B.C.'s Lower Mainland, has started work on a two-building industrial project in Richmond near the Vancouver airport that will deliver almost a quarter-million square feet of strata product into the market.

Preloading of the site has just started, and pre-sales are now under way, Aaron Fedora, vice-president, development with Cedar Coast, said.

Orion Construction is building the 44-unit project called Bridgeport Central, located at Van Horne Way and River Drive. The project will include a building with 26 small-bay units with enclosed concrete mezzanines and rear grade-level loading. The second building includes 18 dock and grade-loading units up to 16,000 square feet with concrete mezzanines and small- or large-bay loading layouts.

Avison Young is handling the sales of the units. The project totals 241,000 square feet.

Fedora told RENX the site is zoned IL, which has a broad mix of uses including general industrial, wholesale, indoor recreation, storage, showrooms, restaurant, distribution and manufacturing.

"It's just an exceptionally well-located area that's very rare," Fedora told RENX in an interview. "It has quick access to Vancouver, quick access to Richmond, easy highway access for further distribution and it's also probably the newest and . . . closest industrial site to a Skytrain station."

He estimated it’s about an eight-minute walk to the Bridgeport Canada Line Station.

Cedar Coast purchased the site in 2021.

Region experiencing softer industrial market

The project launches within a regional industrial market that has been softer than in recent years.

Net rental rates have been trending downwards, and dipped to $21.34 per square foot in Q2, according to Avison Young's latest industrial market report. While net rents have decreased, gross rents — including property taxes — have increased by 21 per cent year-over-year, the report said. That has pushed gross rates to a record high of $27.57 per square foot.

Meantime, industrial vacancy has increased to 2.9 per cent by mid-2024, the highest it's been since Q3 2015.

There is currently 5.5 million square feet of vacant space in the region and 6.7 million square feet of space under construction, the report said.

Activity picking up since the summer

Garth White, principal with Avison Young, said there has been a definite softening in rental rates in the region, but a price "delta" has appeared between newer-generation product and older buildings. There has also been an uptick in leasing activity during the past 100 days, he said, noting that roughly a million square feet of space has been leased in the market in that time.

Forecasting the next year-and-a-half, White said vacancy could creep back down as new construction will remain muted over the time period. "There will be about 2.5 million square feet of construction in 2025, which is significantly below what we typically deliver."

It won't take much demand for a space shortage to return in the region, he said.

At Bridgeport Central, there have been four deals within the last 60 days, White said.

"We've got a combination of users and investors. Some investor (purchasers) . . . essentially disappeared for the last 24 months, but we are starting to see them come back and acquire these presale units, which is interesting for me."

Cedar Coast isn't too worried about launching a project in this market, Fedora said.

"We've gone from . . . ultra constrained to still a constrained market," he said. "Vacancy isn't shooting through the roof.”

Building a project like this also takes time with preloading and construction, and the company is interested to see how the pre-sale process unfolds, he said, noting the project will deliver during what they expect to be a stronger market.

"We're already seeing the interest rates beginning to climb down again."

Cedar Coast busy elsewhere in the region

Meanwhile, Cedar Coast continues to work on several other industrial projects in the region including:

• Cade Barr Business Park in Mission: A 400,000-sq.-ft., four-building project that will expand Mission’s total industrial footprint by 25 per cent. Cedar Coast broke ground on that project this past summer;
• Marine and Boundary: A 111,000-square-foot industrial strata complex located at the border of South Burnaby and South Vancouver. Pre-loading just came off that site;
• Riverside Road just south of Highway 1 in Abbotsford. The 13.4-acre business park offers a mix of large-bay, small-bay and freestanding buildings totaling 265,000 square feet. Site development is now underway with construction expected to complete in 2025;
• Kingston Business Park: Located at 11310 Kingston St. in Maple Ridge, the plan is to develop seven buildings totalling 725,000 square feet of light industrial on a 41-acre site. Construction is expected to start in late 2025; and
• Ridgeline Business Centre: Located at the intersection of 28 Avenue and 194 Street in Surrey’s Campbell Heights Business Park. The 4.7-acre site will have a nine-unit large-bay light industrial strata development, totalling 106,000 square feet. Construction is scheduled to begin in mid-2024 with completion expected in late-2025.