Considering the current state of the market, it’s no surprise the two-building 188th Street Industrial Centre in Surrey, B.C.’s Campbell Heights Business Park has been pre-leased months before its scheduled delivery.
“There was unrelenting demand,” said Cushman & Wakefield associate vice-president Eric Rice, who represented owner Sun Life Financial and manager BentallGreenOak in the transactions. Rice worked with his colleagues, executive VP Sean Ungemach and VP Andrew Green, on leasing the project.
“We received multiple offers on each property.”
Rice told RENX proposed uses by prospective tenants ranged from food manufacturing to chemical distribution and even a basketball academy – though the site isn’t zoned for the latter use.
Considering the focus on distribution and logistics in the industrial sector, the tenants which were ultimately successful in leasing space would also come as no surprise. It’s expected to be complete during the second quarter of this year.
188th Street Industrial Centre highlights
The 178,000-square-foot Building B was the first to be leased, with 18 Wheels Logistics taking the entire space. That was followed by NRI Distribution taking 102,488 square feet and D&H Distributing taking 62,512 square feet in Building A, which is now also fully leased.
Rice wouldn’t disclose the leasing details, but said there are seven-, 10- and 11-year leases in place and all were signed for higher prices than what was originally expected.
“If you’re a landlord or a vendor, you’re having a very good time here. If you’re a tenant or a buyer, it’s an extraordinarily fatiguing and frustrating market.”
Construction of 188th Street Industrial Centre began in early 2021. Upon completion it will offer: build-to-suit office improvements; 32-foot clear heights; 79 dock doors; 10 grade doors; a 180-foot truck court between buildings; a 60-foot marshalling area; and 383 parking stalls.
LEED certification is being targeted.
Campbell Heights Business Park
Campbell Heights Business Park is a developing industrial park in South Surrey spanning approximately 1,700 acres and catering to light-impact industrial users for warehouse and manufacturing purposes.
The property’s location at 2929 and 2965 188th St. provides easy access to highways 99, 91, 15, 10 and 1, and the border crossing to the United States is in close proximity.
Many tenants also appreciate having an institutional landlord, which was another factor working in 188th Street Industrial Centre’s favour, he added.
Industrial development pipeline and market forecast
Pure Industrial and BentallGreenOak are each building other industrial facilities of approximately 400,000 square feet in the area, according to Rice.
Unless an overwhelming offer is made, neither will be responding to leasing inquiries until closer to their respective completion dates due to the strength and level of activity in the market.
“There’s significant acreage coming online, but it needs to be zoned and serviced,” said Rice when asked about other potential development land in the neighbouring area.
“It’s just raw land. You’d have to strip the surface of organic materials, so there’s nothing worth discussing for another seven to 10 years.”
The industrial vacancy rate in Metro Vancouver is less than one per cent. That, combined with increasing demand from e-commerce businesses and a limited new industrial land supply, has driven land values and rents up significantly.
“I don’t foresee the market dropping at all, but given the aggressive spike we’ve seen in lease rates, I think it’s probably going to level off,” said Rice. “It’s definitely not going to plummet, but I think it’s going to soften slightly and level off.”