Richmond/Delta, BC industrial report - Avison Young

Richmond/Delta, BC

Industrial Report Spring 2016

Photo Credit: Port Metro Vancouver

Mature industrial markets attracting investors and owners alike

M

etro Vancouver’s historical industrial submarkets of Richmond and Delta registered nearrecord levels of deal and dollar volume in 2015 as owner-occupiers and investors actively sought to acquire assets in an environment characterized by limited supply and tightening vacancy. While new construction and transportation infrastructure continues to reshape Delta’s expanding industrial market and attract investment from all quarters, the maturation of Richmond’s industrial nodes has also proven attractive thanks to sustained demand and ongoing low vacancy. As rents started to climb in 2015 (particularly in Richmond) and vacancy declined as businesses sought to establish or expand their presence in Delta and/or Richmond, institutional investors and their respective real estate arms are acquiring and/ or developing industrial assets in these maturing industrial markets where growth and the potential upside on lease rates moving forward justify the acquisition and/or construction costs. Further reinforcing this sentiment among institutional investors is the growing demand by owner-occupiers to acquire industrial assets – including land, stand-alone

buildings or strata units – in these markets; and, who as purchasers, are now achieving the pricing necessary to entice once reluctant vendors to sell. Achieving vendor expectations has triggered near record levels of investment in Delta and established a new high-water mark in Richmond. Industrial sales dollar volume in Richmond in 2015 ($268M/105 deals) surpassed the previous record dollar volume, which had been set in 2014 ($220M/104 deals). The record number of industrial transactions in Richmond in a single year is 122, which was set in 2008, but recorded just $143M in proceeds. Significant acquisitions in the market in 2015 included Crestpoint Real Estate’s purchase of Key West Business Centre ($34.5M) and Knightsbridge Business Park ($40M). The sale of Vanguard Industrial Estates ($22M) to South Street Development Group was another notable transaction. (For the purposes of this report, Avison Young has not classified the $63M sale of 7911-7991 Alderbridge Way and 4935-4991 No. 3 Road as an industrial transaction due to its mixed-use nature and pricing based on being a redevelopment site with holding income.) continued on page 4

Richmond & Delta Industrial Real Estate Sales and Transactions 2009 - 2015 Richmond Delta

$280 46

$240

115

80

$ Million #

#

Number of Transactions

Partnership.Performance.

Project Construction Map p. 3 Deal Tracker

p. 4

Market Outlook Richmond

Delta

Cap Rates

Industrial Vacancy

Sales Volume

104

Absorption 39

$120 73 24

28

98 25

30

2009

Lease Rates

22

$40 0

p. 2

86

$160

$80

Transaction Summary

105

$200

#

Inside

2010

2011

2012

2013

2014

2015 I 1

Delta records significant industrial sale/leasing activity

Ryan Kerr, Principal 604.647.5094 [email protected]

Mathew Sunderland, Vice-President 604.647.1346 [email protected]

Belleville-Rodair International leased 24,500 sf at 1488 Derwent Way in Delta, a deal that marked the thirdparty logistics provider’s first location in Metro Vancouver.

Industrial sales and leasing activity in Delta and Richmond has remained very active since the last report in the summer of 2015. The following are significant examples of industrial sales and leases.

1005 Derwent Way in Delta. This lease, coupled with the earlier 103,000-sf lease by Direct Distribution LP, resulted in the development being fully occupied.

The TJX Group of Companies, the operator of Winners and HomeSense retail stores, leased the entire second phase of the Dayhu Group of Companies’ Boundary Bay Industrial Park (437,000 sf) development in Delta for use as TJX’s Metro Vancouver distribution operations. Both phases of Dayhu’s 880,000-sf development are now fully leased.

More recently, Bentall Kennedy acquired 8400 and 8500 River Road in Delta from Darrahdi Holdings Ltd. for $49.5 million or $167 per square foot in March 2016. The building at 8400 River Road is a 209,900-sf distribution facility occupied by Damco, a third-party logistics provider that is part of the Maersk Group and provides warehousing and cross-dock operations on behalf of its clients. Included as part of the transaction was 8500 River Road, which is an 83,584-sf manufacturing facility fully leased by Varsteel.

Meanwhile, Lululemon Athletica leased 155,000 sf at 7831 Vantage Way in Delta from Triovest Realty Advisors. Lululemon is relocating its distribution centre from South Burnaby to the Delta submarket in 2016 – a trend that has become more popular with the completion of Highway 17, otherwise known as the South Fraser Perimeter Road.

Jeron Dillon, Associate 604.647.1330 [email protected]

Angus Thiele, Associate 604.646.8386 [email protected]

Partnership.Performance.

Belleville-Rodair International has leased 24,500 sf from Taymor Industries at 1488 Derwent Way in Delta. The third-party logistics provider has solidified its first Metro Vancouver distribution centre at that location. Rampion Enterprises Ltd. has leased 21,425 sf at 1555 Cliveden Avenue in Delta for a five-year term. This is a relocation to Annacis Island after the firm recently sold its facility in East Richmond to RJS Trading International Ltd. Holland Imports has leased the old AaaaahSo Easy Mobile Mini Storage facility at 7990 Hoskins Road in Delta. Holland Imports’ lease includes the entire 111,000-sf facility and is for a five-year term. The building will house a portion of the company’s distribution needs away from its existing Burnaby facility. Orbit Logistics leased the remaining 60,000 sf of Grosvenor’s Millennium VI’s development at

Bentall Kennedy sold a 106,380-sf facility at 12211 Horseshoe Way in Richmond to First Choice Foods Inc. in May 2015 for $13 million or $122 per square foot. Viceroy Homes was the tenant at the time of the transaction. Two properties at 12431-12451 Horseshoe Way in Richmond, which totalled 57,180 sf, were sold by Llernam Holdings Ltd. to a private investor for $10 million and represented a price-per-square-foot of $175. At the time of sale, the properties were fully tenanted by Silgan Plastics Canada Inc. Vanguard Industrial Estates (4671-4771 Vanguard Road) in Richmond was sold to South Street Development Group. The site will likely be redeveloped. The properties, previously owned by Carnarvon Properties Ltd., total 7.66 acres and encompass 193,734 sf of existing building space and traded for $22 million in September 2015. Speeders Indoor ProKarts has leased 49,108 sf from Victor Carpets at 13471 Crestwood Place in Richmond. The old San Mar Clothing company space has been completely retrofitted to house a new indoor electric go-karting facility.  I 2

W 41 AVE

P

RD KE AR CL

GH

D

HW

NA

WA Y

R

VD BL

MARINE WAY

AS

104 AVE

PE ER AS FR H UT SO

DE

FR

88 AVE

AS

ER

88 HI

GH

156 ST

WA Y

152 ST

KING GEORGE BLVD

64 AVE

144 ST

140 ST

72 AVE

72 AVE

64 AVE

64 AVE

144 ST

132 ST

128 ST

120 ST

104 ST

D e lt a

96 AVE

surrey

2

1

RD

104 AVE

88 AVE

132 ST

RD

15

STEVESTON HWY

AY LW SCOTT ROAD

NO 6 RD

NO 4 RD

NO 3 RD

NO 2 RD

NO 1 RD

7R

VE

R NO

128 ST

3 14 9 RI

OR

156 ST

richmond

10

EN

152 ST

120 ST

96 AVE

WESTMINSTER HWY

BLUNDELL RD

SV

KING GEORGE BLVD

NO 6 RD

17

ALDERBRIDGE WAY

O GR

RO AD

D

13 12 4

WESTMINSTER HWY

MAR

B ILL YH

ER

ER

RIM

RN BY

ET

ED

152 ST

LADNER TRUNK RD

152 ST

ARTHUR DR

DELTAPORT WAY

32 AVE 140 ST

24 AVE

144 ST

11

152 ST

128 ST

More then 5.2-million-square-feet of new industrial space proposed or under construction 16 AVE

Address

Project Name/Address

Developer

Size

Construction type

1

11115 Silversmith Place, Richmond

Layfield Group of Companies

Beedie Group

147,378

2

6849-6901 72 Street, Delta

South Fraser Business Park Lot 4 / Fed Ex

Beedie Group

125,000

Development

Q2 2016

3

92 Street and River Road, Delta

Buckingham Industrial Estates (Lot 8)

Prism Construction Ltd.

40,000

Development

Q2 2016

4

13268 Worster Court, Richmond

Gateway Pacific Business Centre (Bldg. B)

Sunlife Financial

79,116

Development

Q3 2016

5

12920 Mitchell Road, Richmond

Greypointe Business Centre (Phase 4)

Wales McLelland

33,300

Development

Q3 2016

6

11480-11500 River Road, Richmond

11480-11500 River Road

PCI Developments

222,755

Renovation

Q3 2016

7

7927 Huston Road & 7927 River Road, Delta

Delta Link Business Park

Beedie Group

Up to 1.5 msf

Development

Q2 2017

8

8140 92 Street, Delta

Buckingham Industrial Estates (Lot C) TAS Refrigerated Distribution

Prism Construction Ltd.

65,000

Development

Q2 2017

9

9450 River Road, Delta

Tilbury Distribution Centre

Beedie Group / GWL

289,000

Development

Q2 2017

10

Q1 2016

16111 Blundell Road, Richmond

Hopewell Distribution Centre (Phase IV)

Hopewell Development

336,000

Development

Q2 2017

11

41B &27B Avenue, Delta

Tsawwassen Gateway Logistics Centre (Phase I)

GWL Realty Advisors

Up to 1.2 msf

Development

Q3 2017

12

13200-13260 Delf Road, Richmond

Knightsbridge Business Park

Crestpoint Real Estate

259,440 sf (14.7 acres)

Renovation

N/A

3810 & 3960 Jacombs Road, Richmond

Key West Business Centre

Crestpoint Real Estate

271,388 (13 acres)

Renovation

N/A

8051 92 Street, Delta

Buckingham Industrial Estates (Lot 7)

Prism Construction Ltd./Bandstra Transportation Systems

113,200

Development

TBD

15

10651 No. 6 Road, Richmond

10651 No. 6 Road

Port Metro Vancouver

330,540

Development

TBD

16

13201 River Road, Richmond

TBD

Spire Development

71,780

Development

TBD

17

11111 Twigg Place, Richmond

11111 Twigg Place

English Bay Contracting

13.64 acres

Development

TBD

18

4671 & 4771 Vanguard Road, Richmond*

Vanguard Industrial Estates

South Street Development Group

193,734 (7.66 acres)

Redevelopment

TBD

14

1

* Currently available for sale

Partnership.Performance.

1

see number 8 on map for location

16 AVE

Estimated Completion

Development/ Expansion

13

DH

DE

RIN

RI

5 BRIDGEPORT RD

KNIGHT ST

18

6 16

E AV E V H NT H A TE HT G EI

CB

IMPERIAL ST

M

Y WA DA

GS

CA

KIN

W 49 AVE

MA

EE

Y

Proposed industrial development plans in Richmond/Delta remain active SE

GH

AUSTIN AVE EE

E COLUMBIA ST

W 41 AVE

LO U

COMO LAKE AVE

S

R

AY IW

LO U BOUNDARY RD

ED

GL GA

D AR

YP

W KING EDWARD AVE RIN

KNIGHT ST

MA

SW AY

E BROADWAY

ST JOHNS ST

RUPERT ST

W 16 AVE

NG

NANAIMO ST

KI

WILLINGDON AVE

W BROADWAY

SW

ENFREW ST

CLARK DR

W 4 AVE

HASTINGS ST

Source: Avison Young

I 3

richmond & delta industrial sales transactions (>$1.5 million) june 1, 2015 to December 31, 2015 ADDRESS 2451 Vauxhall Place

MUNICIPALITY Richmond

TRANSACTION VALUE $1,930,000

SQUARE FEET (SF)

PER SQUARE FOOT (PSF)

10,252

$188

DATE December 2015

Mitchell Island Business Centre

Richmond

$2,746,654

14,686

$187

December 2015

2420 Shell Road

Richmond

$3,850,000

22,550

$171

December 2015

11620 Horseshoe Way

Richmond

$4,200,000

22,877

$184

December 2015

11655 Eburne Way

Richmond

$2,285,000

15,547

$147

November 2015

12371 Horseshoe Way

Richmond

$1,525,000

8,845

$172

November 2015

12431-12451 Horseshoe Way

Richmond

$10,000,000

57,180

$175

October 2015

11871 Hammersmith Way

Richmond

$2,905,000

13,000

$223

October 2015

12580 Vickers Way

Richmond

$5,100,000

16,800

$304

September 2015

12951-12971 Bathgate Way

Richmond

$7,100,000

34,000

$209

September 2015

Vanguard Industrial Estates

Richmond

$22,000,000

193,734

$114

September 2015

The Oronzo Pavone Building

Richmond

$7,100,000

32,223

$220

September 2015

23080 Hamilton Road

Richmond

$3,500,000

23,625

$148

September 2015

Key West Business Centre

Richmond

$34,500,000

271,388

$127

August 2015

1091 Eburne Place; 11531 Eburne Way

Richmond

$2,290,550

7,012

$327

August 2015

11780 River Road

Richmond

$2,000,000

9,242

$216

July 2015

12420 Vulcan Way

Richmond

$3,000,000

10,929

$274

July 2015

2231 Vauxhall Place

Richmond

$2,325,000

13,638

$170

July 2015

12155 Riverside Way

Richmond

$4,750,000

24,635

$193

June 2015

CDF Corporate Centre

Richmond

$3,980,000

23,546

$169

June 2015

12200 Riverside Way

Richmond

$3,380,000

13,273

$255

June 2015

7900 Nelson Road

Richmond

$10,334,000

125,000

$83

June 2015

6605 Dennett Place

Delta

$3,500,000

23,200

$151

December 2015

1345 Cliveden Avenue; 801 Carleton Court

Delta

$17,840,000

78,350

$228

December 2015

Tilbury West Corporate Centre - Phase II

Delta

$1,564,365

9481

$165

November 2015

Tilbury West Corporate Centre - Phase II

Delta

$1,511,360

9,445

$160

November 2015

Tilbury West Corporate Centre - Phase II

Delta

$2,076,840

12,820

$162

November 2015

904-908 Cliveden Avenue

Delta

$8,291,222

63,084

$131

November 2015

1066 Cliveden Avenue

Delta

$6,483,065

69,350

$93

November 2015

7198 Progress Way

Delta

$8,850,000

60,680

$146

October 2015

7119 River Road

Delta

$3,595,000

8,792

$409

September 2015

1325 Derwent Way

Delta

$3,600,000

29,575

$122

August 2015

Tilbury West Corporate Centre II - Phase I

Delta

$1,870,560

11,690

$160

August 2015

7216 Brown Street

Delta

$14,654,889

34,375

$426

July 2015

7601 Macdonald Road

Delta

$4,900,000

32,551

$151

July 2015

8035 Alexander Road

Delta

$4,180,000

44,366

$94

June 2015

Tilbury West Corporate Centre II - Phase I

Delta

$1,847,336

11,692

$158

June 2015

1639 Foster's Way

Delta

$4,250,000

22,548

$188

June 2015

Source: RealNet & Avison Young

continued from page 1

Vancouver Industrial Team Kyle Blyth 604.647.5088 [email protected] Russ Bougie 604.757.5115 [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] Ryan Kerr* 604.647.5094 [email protected] Nabila Lalani

604.647.1342

[email protected]

John Lecky 604.647.5061 [email protected] Joe Lehman

604.757.4958

[email protected] Mackenzie Leyland

604.647.1354 [email protected]

Bennett Lutes 604.646.8382 [email protected] Chad Margolus 604.647.1357 [email protected] Mackenzie Patterson 604.757.4950 [email protected] Gord Robson 604.647.1331 [email protected] Struan Saddler* 604.647.5077 [email protected] Mathew Sunderland*

604.647.1346 [email protected]

Angus Thiele 604.646.8386 [email protected] Terry Thies 604.646.8398 [email protected] Matt Thomas 604.646.8383 [email protected] Layla Vera 604.647.8384 [email protected] Ian Whitchelo 604.647.5095 [email protected] Garth White* 604.757.4960 [email protected]

* Personal Real Estate Corporation For more information please contact: Michael Keenan, Principal & Managing Director Direct Line: 604.647.5081 [email protected] Andrew Petrozzi, Vice-President, Research (BC) Direct Line: 604.646.8392 [email protected]

Avison Young #2900-1055 W. Georgia Street Box 11109 Royal Centre Vancouver, BC V6E 3P3, Canada

Vacancy in Richmond tightened to 2% at year-end 2015 from 3.3% at mid-year 2015, due to strong leasing activity and a lack of new inventory delivered to the market. Industrial sales activity in Delta in 2015 ($133M/39 deals) was the second strongest on record during the past decade. Only the record-setting 2013 ($236M/46 deals) surpassed the activity levels registered in 2015. Vacancy dropped to 4% at year-end 2015 from 6.8% six months earlier as strong leasing activity and a lack of new vacant supply pushed vacancy below 5% in Delta for the first time since spring 2009. Deal velocity and dollar volume in Delta and Richmond are expected to remain strong in 2016 as existing vacancy is absorbed in the next 12 months as intense demand from investors and owner-occupiers motivates those seeking to relocate or expand to either prelease space in new projects or acquire suitable strata premises. 

avisonyoung.com © 2016 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.