Strong industrial sales and leasing activity in the. Richmond and Delta, BC submarkets has continued since mid-2014 even
Richmond/Delta, BC Industrial Report Summer 2015
Photo Credit: Port Metro Vancouver/William Jans Photography
Strong industrial sales and leasing activity reshaping submarkets
S
trong industrial sales and leasing activity in the Richmond and Delta, BC submarkets has continued since mid-2014 even as new development redefines Delta’s industrial landscape and the transition of many of Richmond’s former industrial properties to higher uses accelerates. While sales activity in Delta in the first half of 2015 returned to more historical levels, the municipality recorded the greatest amount of leasing activity in the region during the past 12 months. The completion of a number of large industrial deals in Richmond in the first half of 2015, including two of the largest industrial transactions in the city’s history, will likely result in a record 2015 in terms of dollar volume.
Vacancy declined in Delta to 6.8% at mid-year 2015 from 8.4% a year previous, as tenants leased up space in many of the new large-scale developments that have recently completed. These larger industrial users, typically logistics and distribution companies, were unable to locate and lease suitable space in 2014 and were awaiting the completion of projects that had kicked off in 2012/13. Average lease rates have risen due to the greater prevalence of new efficient premises. Smaller users either leased space in older, less efficient premises or purchased strata units – an important component of sales activity in a municipality where sites remain difficult (and expensive) to secure for those wishing to build their own facility.
Industrial sales dollar volume in Delta during the first half of 2015 ($49.8M/14 deals) has already surpassed the total dollar volume recorded in 2014 ($45.5M/22 deals) and is set to return to more recent historical deal and dollar volumes after a record 2013 that registered a very significant sales spike ($236.3M/46 deals). A number of large assets in Delta traded in 2013 that are unlikely to transact again for the foreseeable future. Falling debt costs compressed cap rates in 2013 and precipitated many of the deals that subsequently transacted. Owner/ users are back driving the market again in 2015.
Industrial sales activity in Richmond during the first half of 2015 ($191.7M/48 deals) is well on pace to set a new record in terms of annual dollar volume. The previous record was set in 2014 ($213.9M/100 deals) and will almost certainly be surpassed. Richmond is a market in transition as many of the sales registered in 2015 are properties that will be repurposed. As flex office/ industrial users have increasingly gravitated towards premises near public transit, rising vacancy in more traditional light industrial parks provided an avenue for investors to acquire assets for repositioning. continued on page 4
Richmond & Delta Industrial Real Estate Sales and Transactions
Inside Transaction Summary p. 2 Project Construction Map p. 3 Deal Tracker p. 4
Market Outlook Richmond
Delta
Cap Rates
Industrial Vacancy
Sales Volume
2008 - 2014
Richmond Delta
$280 46
$240
115
$200 $ Million
$160
# #
$120
#
Number of Transactions
Partnership.Performance.
80 86
122 40 73 24
$80
28
98 25
30 22
$40 0
Absorption
100
2008
2009
2010
2011
2012
2013
Lease Rates
2014 I 1
Industrial leasing and sales activity powering submarkets
Ryan Kerr, Principal 604.647.5094
[email protected]
Tilbury Distribution Centre, which is being developed by GWL Realty Advisors, is just one of a half dozen of the new logistics/distribution-focused projects currently under development in Delta.
D
elta recorded some of the strongest industrial leasing activity in Metro Vancouver during the past 12 months while sales were more muted. Richmond, on the other hand, registered significant levels of both industrial leasing and sales.
Mathew Sunderland, Vice-President 604.647.1346
[email protected]
Dominion Warehousing completed a 15-year lease transaction with Bosa Development for 250,000 sf at 1020 Derwent Way in Delta. Dominion will move into the distribution centre space on Annacis Island that was previously occupied by LG Electronics.
The Dayhu Group of Companies successfully leased up phase one of its Boundary Bay Industrial Park development. Four tenants each took approximately 110,000 sf in the 440,000-sf project. The tenants included Apps Cargo Terminals, Speciality Distributors, Farrow Logistics and Pet Valu. Due to the success of the first phase, construction is currently underway on phase two, which includes a 428,000-sf distribution/logistics centre. Direct LP will occupy the majority of Grosvenor Americas’ new Millennium VI development at
Jeron Dillon, Associate 604.647.1330
[email protected]
1005 Derwent Way on Annacis Island after it leased 103,000 sf of the 162,000-sf development. Direct LP is relocating from East Richmond after signing a 10year deal in the recently completed next-generation distribution centre. Rodair International will expand its presence in Metro Vancouver with the recent lease of 1488 Derwent Way from Mason Investments. The freight forwarder’s 25,000-sf lease runs until 2020. Fountain Tire renewed the lease for its BC distribution centre, which is located in Morguard’s South Fraser Distribution Centre at 7510 Hopcott Road. The renewal term was for three years.
Sean Keenan, Associate 604.757.5267
[email protected]
Partnership.Performance.
In one of the more recent significant sale transactions, Bentall Kennedy acquired the 77,101-sf Ocean Ridge Business Park on Annacis Island in Delta for
$11M. The building sits on a 3.61-acre lot. Crestpoint Real Estate Investments made a dramatic entrance into Richmond’s industrial market by acquiring both Knightsbridge Business Park ($40.25M) and, more recently, Key West Business Centre in 2015. Crestpoint has indicated it plans to renovate and reposition both assets. Meanwhile, PCI Developments acquired 1148011500 River Road ($17.5M) in Richmond and is currently retrofitting the building. The developer has implemented a leasing program for the remaining vacancy in the 222,755-sf asset. Orbit Distribution Systems is relocating from South Burnaby to the old Honda distribution facility located at 13240 Worster Court in Richmond. Orbit’s lease for 147,000 sf in Sun Life Financial’s recently retrofitted building will run for a nine-year term. Bunzl Canada also recently renewed its 116,292-sf lease in Kingswood Business Park at 7433 Nelson Road in East Richmond for eight more years.
An Asian investor acquired the mixed-use flex office/industrial complex at 7911-7991 Alderbridge Way/4935-4991 No. 3 Road for $63M in February 2015 in the largest industrial deal in Richmond’s history. The property, which consists of four buildings and is located on a 7.89-acre lot, has a total gross leasable area of 169,070 sf along with 6,130 sf of second floor retail and office space. Two well-known developers in Metro Vancouver acquired 5520, 5560 and 5660 Minoru Boulevard for $35.45M in December 2014. The properties, which are currently home to two multi-tenant industrial buildings and an auto dealership, were acquired with an eye to redevelopment. In a similar scenario, a developer acquired the Keybridge Centre at 6851 and 6871 Elmbridge Way for $31.3M based on an opportunity to redevelop the site. I 2
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Approximately 3.5-million-square-feet of new logistics space proposed or under construction in Delta 16 AVE
Address
Project Name Tilbury West Corporate Centre II, Phase 2 Boundary Bay Industrial Park, Phase 2
Developer
16 AVE
Size
Construction type
Estimated Completion
Beedie Group
98,512 sf
Development
Q2 2015
Dayhu Group Companies
427,400 sf
Development
Q4 2015
289,000 sf
Development
Q3 2016
Up to 1.5 msf
Development
Q4 2016
336,000 sf
Development
Q4 2016
Up to 1.2 msf
Development
Q1 2017
1
6901 72nd Street, Delta
2
8181 Churchill Street, Delta
3
9450 River Road, Delta
Tilbury Distribution Centre
GWL Realty Advisors
4
7927 Huston Road & 7927 River Road, Delta
Delta Link Business Park
Beedie Group
5
16111 Blundell Road, Richmond
6
41B & 27B Avenue, Delta
7
13240 Worster Court, Richmond
Gateway Pacific Business Centre
Sun Life Financial
8
13200-13260 Delf Road, Richmond
Knightsbridge Business Park
Crestpoint Real Estate
9
11480-11500 River Road, Richmond
11480-11500 River Road
PCI Developments
10
3810 & 3960 Jacombs Road, Richmond
Key West Business Centre
Crestpoint Real Estate
11
4671 & 4740 Vanguard Road, Richmond
Vanguard Industrial Estates
South Street Development
12
11111 Twigg Place, Richmond
11111 Twigg Place
English Bay Contracting
13
10651 No. 6 Road, Richmond
10651 No. 6 Road
Ledcor
Hopewell Distribution Centre, Phase 4 Tsawwassen Gateway Logistics Centre
Hopewell Development GWL Realty Advisors
147,378 sf 259,440 sf (14.7 acres) 222,755 sf (9.5 acres) 271,388 sf (13 acres) 193,734 sf (7.66 acres)
Renovation/ Reposition Renovation/ Reposition Renovation/ Reposition Renovation/ Reposition
NA NA NA NA
Redevelopment
TBD
13.64 acres
Development Site
TBD
14.3 acres
Development Site
TBD Source: Avison Young
Partnership.Performance.
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Proposed industrial development plans in Richmond/Delta remain active SE
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I 3
RICHMOND & DELTA INDUSTRIAL SALES TRANSACTIONS (>$1.5 MILLION) JUNE 1, 2014 TO JUNE 30, 2015 MUNICIPALITY
TRANSACTION VALUE
SQUARE FEET (SF)
PER SQUARE FOOT (PSF)
DATE
12155 Riverside Way
Richmond
$4,750,000
24,635
$193
June 2015
11400 Twigg Place
Richmond
$2,100,000
13,751
$153
May 2015
12211 Horseshoe Way
Richmond
$13,000,000
106,380
$122
May 2015
CDF Corporate Centre
Richmond
$2,350,000
11,041
$213
May 2015
ADDRESS
11400 Twigg Place
Richmond
$1,853,250
10,591
$175
April 2015
Knightsbridge Business Park
Richmond
$40,250,000
259,440
$155
April 2015
Maycrest Business Centre
Richmond
$1,892,000
7,919
$239
March 2015
7911-7991 Alderbridge Way; 4935-4991 No. 3 Road
Richmond
$63,000,000
169,070
$373
February 2015
11480-11500 River Road
Richmond
$17,500,000
222,755
$79
February 2015
18371 McCartney Way
Richmond
$5,875,000
21,150
$278
January 2015
5520, 5560 & 5660 Minoru Boulevard
Richmond
$35,450,000
97,853
$362
December 2014
6600 Fraserwood Place
Richmond
$5,605,000
31,051
$181
December 2014
4131 Vanguard Road
Richmond
$2,431,000
9,875
$246
November 2014
Keybridge Centre
Richmond
$31,300,000
78,195
$400
October 2014
CDF Corporate Centre
Richmond
$2,100,000
11,041
$190
October 2014
5760 Cedarbridge Way
Richmond
$3,238,000
10,080
$321
October 2014
12211 Vulcan Way
Richmond
$2,665,000
25,819
$103
October 2014
4455 No. 6 Road
Richmond
$9,300,000
56,236
$165
October 2014
9291 & 9311 River Drive
Richmond
$20,400,000
200,505
$102
October 2014
4460 Jacombs Road
Richmond
$8,100,000
40,084
$202
August 2014
Industrial Team Kyle Blyth 604.647.5088
[email protected] Jeron Dillon 604.647.1330
[email protected] John Eakin 604.646.8399
[email protected] Michael Farrell 604.646.8388
[email protected] Rob Gritten 604.647.5063
[email protected] Kevin Kassautzki 604.646.8393
[email protected] Sean Keenan 604.647.1334
[email protected] Ryan Kerr* 604.647.5094
[email protected] Nabila Lalani 604.647.1342
[email protected]
2480 Viking Way
Richmond
$6,313,622
50,495
$125
August 2014
11180 River Road
Richmond
$3,030,000
27,015
$112
August 2014
John Lecky 604.647.5061
[email protected] Joe Lehman
12111 Bridgeport Road
Richmond
$8,900,000
40,700
$219
June 2014
[email protected]
11060 Horseshoe Way
604.757.4958
Mackenzie Leyland 604.647.1354
[email protected]
Bennett Lutes 604.646.8382
[email protected] Douglas McMurray 604.647.5082
[email protected] Gord Robson 604.647.1331
[email protected] Struan Saddler* 604.647.5077
[email protected] Mathew Sunderland* 604.647.1346
[email protected]
Terry Thies 604.646.8398
[email protected] Matt Thomas 604.646.8383
[email protected] Ian Whitchelo 604.647.5095
[email protected] Garth White* 604.757.4960
[email protected]
Richmond
$4,100,000
28,359
$146
June 2014
1639 Foster's Way
Delta
$4,250,000
22,548
$188
June 2015
6537 River Road
Delta
$4,750,000
9,550
$497
May 2015
For more information please contact:
Tilbury West Corporate Centre II - Phase II
Delta
$5,323,465
33,137
$161
May 2015
1659 Foster's Way
Delta
$4,700,000
17,280
$272
April 2015
Michael Keenan, Principal & Managing Director 604.647.5081
[email protected]
7046 Brown Street
Delta
$6,600,000
20,938
$315
March 2015
575 Ebury Place
Delta
$3,230,000
20,730
$156
March 2015
7464 Hume Avenue
Delta
$2,311,888
20,884
$111
January 2015
Ocean Ridge Business Centre
Delta
$11,000,000
77,101
$143
January 2015
7543 Vantage Place
Delta
$1,675,000
6,400
$262
December 2014
616-640 Chester Road
Delta
$4,800,000
46,151
$104
October 2014
7388 Hume Avenue
Delta
$2,625,000
18,190
$144
October 2014
1668 Foster's Way
Delta
$3,750,000
25,461
$147
August 2014
1500-1520 Derwent Way
Delta
$9,750,000
79,475
$123
July 2014
Tilbury West Corporate Centre II - Phase I
Delta
$1,602,029
11,203
$143
July 2014
7504 Vantage Place
Delta
$2,400,000
22,135
$108
June 2014
*Personal Real Estate Corporation
Andrew Petrozzi, Vice-President, Research (BC) 604.646.8392
[email protected] Khushboo Wanchoo, Industrial Research Manager 604.647.1345
[email protected]
Avison Young #2900-1055 W. Georgia Street Box 11109 Royal Centre Vancouver, BC V6E 3P3, Canada
continued from page 1
Vacancy remained stable in Richmond at 3.3% as of June 30, 2015, virtually unchanged from 3.1% at the same point in 2014. With no new supply recently added to Richmond’s industrial inventory and the municipality seeking to consolidate industrial operators in East and South Richmond, owner/users have had an increasingly difficult time locating suitable premises. Another factor complicating industrial development is the high cost of Richmond’s development cost charges to build new flex office/industrial space in comparison with other Metro Vancouver municipalities. This has encouraged the widespread retrofitting of older less efficient industrial premises. Lease rates have remained stable, but upward pressure could manifest if vacancy remains tight and retrofitted space starts to come available in the popular submarket.
avisonyoung.com © 2015 Avison Young. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young Commercial Real Estate (B.C.) Inc.; DBA, Avison Young.
