Urban Intel: Surrey/ Langley Industrial Market (May 2023)
The demand for industrial space is still high in the Surrey / Langley Submarket. The Submarket has witnessed strong growth in lease rates, growing by 13.3% on average per annum over the last 3 years. Rents are currently averaging roughly $19 psf per year NNN and the vacancy rate is currently around 1.2%, even after the delivery of 2.4 million SF over the past 12 months. Thus, the industrial market fundamentals of the Submarket are very strong. Further, considering that there is limited industrial inventory in the market, the rents are likely to maintain their current levels or increase marginally over the next year.
Contrary to expectations, investment sales volumes in the first quarter of 2023 saw a significant increase from the previous quarter. There is strong demand for redevelopment assets as well as top quality industrial assets, tenanted by well-established firms. Due to strong demand in the Submarket, market prices have increased to roughly $440 per square foot, which transalates to an increase of 10% over the past 12 months. Howver, the average cap rates have widened marginally to roughly 4%.
The Surrey/ Langley submarket is favoured by the logistics and distribution related businesses as the properties have tended to be much newer, larger and with taller ceiling heights compared to the other submarkets in Metro Vancouver. It has historically been known for housing large industrial warehouses and manufacturing facilities, with nearly 25% of Metro Vancouver’s industrial stock in the Surrey/Langley (City and Township) market. Industrial nodes include Bridgeview, Newton, Campbell Heights, Cloverdale and Port Kells in Surrey, and Northwest Langley, Langley City, Gloucester and Aldergrove in Langley.