Longstanding relationships with a local broker and a development partner have made it possible for Vancouver’s Denciti Development to find a prime building site in Langley, and to quickly move ahead with a much-needed strata industrial development.
Langley Gateway, at 90,000 square feet, won’t be the largest industrial development in Metro Vancouver, but it will be the first of its kind in the Langley area in about 15 years, according to Denciti principal Garry Fawley.
“Real estate hasn’t changed, it’s still location, location, location,” Fawley told RENX. He called the Langley site, just metres from the junction of Highway 1 and 200th Street, “unparalleled.”
“For this product type as far as value for owners going forward, it’s going to be a terrific asset and it will stand the test of time. When we found this site, we thought we had a winner because it’s so close to the intersection.”
Fawley said demand in the region continues to be high, but development land for industrial is highly constrained. So, when Denciti was offered the opportunity to buy the six-acre site at 19708 86th Ave. in the township, it moved quickly.
“We’re merchant developers so we don’t tend to hold (land in) inventory,” Fawley said. “We have a really close relationship with the brokerage community. Frontline (Real Estate Services) brought this to us first so we were able to, because of its location and value, to move quickly to put it under contract and buy the property.”
The sale closed in December of 2019.
Denciti, Nicola Wealth partners in Gateway
Fawley said Denciti and development partner Nicola Wealth Real Estate are now working to adjust the zoning for the project and expect to begin construction by the middle of 2021. Although the rezoning is expected to proceed fairly easily, Fawley said the site does pose some challenges due to the presence of valuable wetlands in the area.
“So we had to carefully negotiate with the township, what our net area would be and what areas we had to give up for wetlands and setbacks.”
The result will be a two-building development with a total of about 90,000 square feet of leasable space. Fawley said both structures will be built at the same time, though they will have a few differences.
The plan is to construct to heights of 24 or 26 feet and to incorporate office space on a mezzanine level: “One of the things we did early on this was to price the mezzanine into the price per square foot and the market agreed to pay that,” Fawley said.
One building will feature standard bay sizes of about 2,600 or 3,550 square feet including the mezzanines. It will offer rear loading and front access.
The second building, because it will be closer to the property line, will have both front loading and front access. Units in this building are slated to be about 3,500 square feet.
Begin sales in 2021
Fawley said the construction investment will be about $15 million.
He also said there’s no rush to put the individual units on the sale market.
“The demand from looking at the jurisdiction, even over into Cloverdale, (similar) units are selling at a good pace and if anything the prices are inching up,” he said. “In talking to Frontline, we’ll start in the new year.
“The market is going our way, so wait until 2021.”
Whenever they are released for sale, it’s likely they’ll enter into a market with almost no existing space available. Metro Vancouver’s industrial vacancy is below two per cent and it’s an even tighter sub-one per cent in Langley.
“If you look at this area, because of its accessibility it’s relatively mature . . . particularly the north toward Port Kells,” Fawley said. “Everything is built out.”
Industrial demand strong throughout region
Frontline’s Todd Bohn said the pandemic has had no impact on the region’s industrial sector.
“Despite some economic uncertainty and a few slow months due to COVID-19, the industrial market remains resilient,” said Bohn, partner and industrial specialist at Frontline, in an announcement about the project being released Thursday.
“Demand in the sector continues to outpace supply and we are still seeing businesses growing and looking for more space. Many are back to operating at pre-pandemic levels or better due to economic and social changes. Generally, we have not seen industrial businesses struggling.
“The perceived impending recession is not a recession for all industries.”
Gateway is Denciti’s third development announcement in the past couple of months, all in partnership with Nicola Wealth. Fawley said as with the Langley project, their relationship has allowed Denciti to quickly move ahead when opportunities have arisen.
“We really enjoy working with them. They’re supportive, straight-up, very sophisticated,” he said. “They recognized the potential value in what we are doing and bought in to support it.
“When I talk to Nicola on the real estate side, I am talking to a sophisticated player that can understand our ideas and say, ‘You guys have always performed, we are in’.”
Denciti and Nicola Wealth have partnered on 16 ventures during the past five years.
Multifamily projects in Victoria, Nanaimo
Their two other recent partnerships involve multiresidential builds in Victoria and Nanaimo, containing a total of 382 apartments. This has created a somewhat ironic situation for Fawley, who has four decades of experience in the development industry.
“The ironic thing is the two categories we didn’t do, because they didn’t have any life to it in our opinion, was rental residential and industrial. Only in the past four years have we really picked those asset classes up,” he said, chuckling. “It’s really interesting late in my career to work on two areas I find fascinating, but which I didn’t get the chance to do earlier.
Looking ahead, Denciti is hoping to acquire land for a few more projects in areas such as Chilliwack, Nanaimo, Kelowna and Victoria.
It is also deciding how best to proceed with the third-and-final phase of a project in Kelowna. It has already sold out about 270,000 square feet of strata industrial in the first two phases, but will employ a different strategy for the third building.
“Buildings one and two are sold out. Building three we are just rationalizing that. We’ve got a five-acre site at the back and I don’t think we can do it condo,” he said, because it doesn’t have the visibility for that type of product.
“Demand is excellent up there, so it’s a little bit different formula. We would build it, lease it and then market it for sale as a finished product.”
About Denciti, Nicola Wealth
Denciti Development Corp. is a real estate company creating urban industrial, commercial and residential development. It has delivered over $2 billion of real estate across Canada.
Nicola Wealth Real Estate is the real estate arm of Nicola Wealth, a financial planning and investment firm with over $7 billion of assets under management. Its current real estate portfolio is $4 billion.
NWRE acquires and manages a growing portfolio of properties in major markets across North America. Its holdings include office, retail, industrial, multifamily residential, self-storage and seniors housing.