Metro Vancouver-based Colony Construction is building a three-storey strata building in Surrey’s Campbell Heights business park, the latest stacked industrial project in an emerging wave of multi-level developments in the region.

The industrial-asset class has been performing relatively strongly despite economic challenges and elevated interest rates. 

The new development is called X34A. Marketed by Frontline Real Estate Services, the strata project now awaits building permits and is to take shape on the corner of 34A Avenue at the intersection of 191 Street in North Campbell Heights.

The development includes five for-sale units totalling roughly 50,000 square feet with ground-floor warehouses, second-floor mezzanine and 10 loading doors at grade. The units range from 8,772 to 13,105 square feet.

The planned building also includes a third storey for a self-storage facility that will operate as a separate business.

The building will also include an underground parking level which increases the project’s parking ratio and allows for more office floor space for each unit.

The developers say the building is designed for owner-occupiers who want to have their office and warehouse operations in a single location. 

In-building parking and steel construction adds flexibility

The project is unique locally on a couple of fronts, Colony Construction president Jesse Atkinson said.

First, it provides an efficient use of land. With parking being folded into the structure, the building is aiming for roughly 56 per cent lot coverage.

A typical industrial lot in the area has about 40 per cent lot coverage, Atkinson told RENX in an interview.

"You're getting much better usage of the land,” Atkinson said. “We're achieving that through our underground parkade."

The gated parking area should also provide more security for the owner/occupiers who may be storing expensive vehicles and tools at the building.

The structure will also be constructed using steel-X bracing instead of concrete slabs, providing more design and configuration flexibility, Atkinson said.

The steel bracing also requires a smaller crane, which is helpful for the construction process given the structure itself is taking up most of the site’s footprint.

The storage portion will operate as a separate strata unit and could be used for high-security document storage for sensitive files, or a similar use, Atkinson said, noting his firm might opt to retain the storage component and operate that as a business.

Given land constraints in the region, strong demand and extremely low industrial vacancy, stacked industrial projects have become more common in recent years.

Among other multi-level projects are the Oxford Properties Group Riverbend Business Park in Burnaby; Wesgroup Properties’ two-level Elevate building in Coquitlam and Conwest’s Riverworks project and completed Ironworks building in Vancouver.

In South Vancouver, near the Marine Drive Canada Line Station, Wesbild has partnered with KingSett Capital on Marine Landing, a two-building, 341,000 square-foot project with 242 strata units that include industrial and office spaces ranging in size from 600-34,000 square feet.

That project is now under construction.

Regional industrial market remains strong 

The vacancy rate in the Greater Vancouver Area industrial market climbed in Q1 2023 for the first time since Q1 2022.

The regional vacancy rate climbed by 40 basis points quarter-over-quarter but still remains at a very low 0.6 per cent, according to Colliers Q1 2023 Vancouver Industrial Market Report, which marked overall availability at 1.5 per cent.

The report said the vacancy rate has been less than one per cent for 10 consecutive quarters as demand for space continues to outweigh supply.

That pushed average asking net leasing rates to a record-high of $22.09 per square foot — a 20.4 per cent increase year-over-year.

"Campbell Heights is pretty consistent with what we're seeing across the (Fraser) Valley," Braydon Hobbes, an industrial sales and leasing broker with Frontline Real Estate Services, said.

"Supply is still . . . very low and the demand didn't come down significantly with this (elevated) interest rate environment."

Demand is especially high among smaller owner-occupiers, which can serve as a confidence or sentiment bellwether for the regional economy.

Hobbes said the industrial market has softened somewhat compared to two years ago and that should prompt more realistic pricing.

That said, new small-bay inventory is not sitting long in the Surrey market.

Colony Construction focuses on commercial design build and general contracting, and specializes in industrial steel buildings.

Launched in 1985, the company has constructed more than 580 buildings around the world with projects in aviation, agriculture, forestry, energy, mining, sports facilities and more.

Atkinson said being the developer, designer and builder of the Campbell Heights project afforded it the flexibility to get creative and adjust "in real time."

"We were able to sort of do it on the fly," Atkinson said. "It's just a much more fluid approach.”