Some industrial tenants have begun relocating to Tilbury Industrial Park from Annacis Island to take advantage of the South Fraser Perimeter Road.
That’s according to a fall 2011 industrial real estate market report for Delta, published by commercial real estate services company Avison Young.
The report says rental rates have not yet been affected, but could change as the SFPR nears its expected completion date in 2013.
As a result of tenants shifting, industrial vacancy on Annacis Island has increased in recent months.
The Avison Young report says nearly $74 million has been invested in Delta industrial real estate from January to November 2011. That’s approaching the full-year total for 2010 ($82.1 million) and 2009 ($79.6 million), but falls short of the 2008 five-year high of $109.3 million.
The number of transactions closed in 2011 is 20, so far, and that’s not expected to surpass last year’s 28 transactions or the 40 deals closed in 2008.
In 2011, two deals involved properties exceeding the $10 million mark.
“The low cost of debt, combined with replacement costs running higher than acquisition costs in Delta, has pushed many buyers—particularly sophisticated investors—to reach for any quality product that comes on the market,” said Ryan Kerr, an Avison Young associate specializing in Delta sales and leasing.
Meanwhile, Delta’s industrial vacancy rate increased 8.5 per cent in fall 2011 from 7.9 per cent in fall 2010. Rental rates and deal flow have remained constant since the spring and that trend is expected to continue into 2012.
The report says industrial leasing activity in Delta had been “somewhat restrained,” particularly after the European debt crisis worsened in late summer, but appears to be picking up again as the end of the year approaches.
In recent years, industrial development in Delta has been driven by expanded port activities, the report says, but the Corporation of Delta’s new 20-year master servicing plan for Boundary Bay Airport is encouraging growth of a new industrial hub tied to the air.
Looking to the future, the report notes the Tsawwassen First Nation has designated some 335 acres of land for industrial use. Plans include up to 3.4 million-square-feet of distribution and logistics space, a new terminal gate, potential intermodal yard and a container and truck handling area, and commercial offices.