Richmond/Delta, BC Industrial Report...Meanwhile, Lululemon Athletica leased 155,000 sf at 7831...
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Photo Credit: Port Metro Vancouver Partnership.Performance. I 1 M etro Vancouver’s historical industrial submar- kets of Richmond and Delta registered near- record 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 infrastruc- ture 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 sus- tained 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 rein- forcing this sentiment among institutional investors is the growing demand by owner-occupiers to ac- quire 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 estab- lished 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 industri- al 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 pur- chase 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 anoth- er 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.) Richmond/Delta, BC Industrial Report Spring 2016 # # # Number of Transactions $ Million 0 $40 $80 $120 $160 $200 $240 $280 2009 2010 2011 2012 2013 Delta Richmond 24 28 73 115 98 25 2014 2015 80 30 86 46 104 22 105 39 Richmond & Delta Industrial Real Estate Sales and Transactions 2009 - 2015 continued on page 4 Market Outlook Richmond Delta Inside Transaction Summary p. 2 Project Construction Map p. 3 Deal Tracker p. 4 Cap Rates Industrial Vacancy Absorption Lease Rates Sales Volume Mature industrial markets attracting investors and owners alike
Transcript of Richmond/Delta, BC Industrial Report...Meanwhile, Lululemon Athletica leased 155,000 sf at 7831...
Photo Credit: Port Metro Vancouver
Partnership.Performance. I 1
Metro Vancouver’s historical industrial submar-kets of Richmond and Delta registered near-
record 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 infrastruc-ture 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 sus-tained 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 rein-forcing this sentiment among institutional investors is the growing demand by owner-occupiers to ac-quire 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 estab-lished 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 industri-al 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 pur-chase 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 anoth-er 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.)
Richmond/Delta, BCIndustrial ReportSpring 2016
#
##
Number of Transactions
$ M
illio
n
0
$40
$80
$120
$160
$200
$240
$280
2009 2010 2011 2012 2013
DeltaRichmond
24 2873
115
98 25
2014 2015
80
30
86
46104
22
105
39
Richmond & Delta Industrial Real Estate Sales and Transactions2009 - 2015
continued on page 4
Market Outlook
Richmond Delta
InsideTransaction Summary p. 2
Project Construction Map p. 3
Deal Tracker p. 4
Cap Rates
Industrial Vacancy
Absorption
Lease Rates
Sales Volume
Mature industrial markets attracting investors and owners alike
Partnership.Performance. I 2
Ryan Kerr, [email protected]
Angus Thiele, [email protected]
Jeron Dillon, [email protected]
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.
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.
Meanwhile, Lululemon Athletica leased 155,000 sf at 7831 Vantage Way in Delta from Triovest Realty Advisors. Lululemon is relocating its dis-tribution centre from South Burnaby to the Delta submarket in 2016 – a trend that has become more popular with the completion of Highway 17, other-wise known as the South Fraser Perimeter Road.
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 Aaaaah-So 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
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.
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 ware-housing 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 manufactur-ing facility fully leased by Varsteel.
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 exist-ing 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 com-pany space has been completely retrofitted to house a new indoor electric go-karting facility.
Belleville-Rodair International leased 24,500 sf at 1488 Derwent Way in Delta, a deal that marked the third-party logistics provider’s first location in Metro Vancouver.
Delta records significant industrial sale/leasing activity
Mathew Sunderland, [email protected]
Partnership.Performance. I 3
LANGLEY BYPASS
FRASER HIGHWAY
FRASER HIGHWAY
HARVIE RD
TRANS-CANADA HIGHWAY
TRANS-CANADA HIGHWAY
TRANS-CANADA HIGHWAY
TRANS-CANADA HIGHWAY
TRANS-CANADA HIGHWAY
TRANS-CANADA HIG
HWAY
FRASER HIGHWAY
FRASER HIGHWAY
56 AVE 56 AVE 56 AVE
DOWNES RD
HUNTINGDON RD HUNTINGDON RD
WELLS LINE RD
CAMPBELL RD
KEITH WILSON RD
VEDDER MTN RD
YALE RD
YALE RD
MACLURE RD
SOUTH FRASER WAY
58 AVE
64 AVE
36 AVE
24 AVE 24 AVE
16 AVE16 AVE16 AVE16 AVE16 AVE
24 AVE24 AVE
32 AVE32 AVE
64 AVE64 AVE
152 ST152 ST
152 ST
144 ST144 ST
156 ST156 ST
168 ST168 ST
200 ST200 ST
208 ST208 ST
208 ST
216 ST216 ST
216 ST
232 ST232 ST
224 ST224 ST
240 ST240 ST
248 ST248 ST
BRAD
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PREST RD
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BRAD
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264 ST
248 ST
232 ST
208 ST
200 ST192 ST192 ST
200 ST
184 ST184 ST
184 ST184 ST
184 ST8 AVE 8 AVE
4 AVE
200 ST200 ST
168 ST168 ST
140 ST
KING
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132 ST
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132 ST
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SCOTT RO
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120 ST120 ST
152 ST152 ST
144 ST140 ST
128 ST
72 AVE
88 AVE 88 AVE
96 AVEGOLDEN EARS WAY
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88 AVE
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104 AVE
GROSVENOR RD
64 AVE
LADNER TRUNK RD
STEVESTON HWY
BLUNDELL RD
NO
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NO
3 RD
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WESTMINSTER HWY
BRIDGEPORT RD
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W 49 AVE
IMPERIAL ST
W 41 AVEW 41 AVE
W KING EDWARD AVE
W 16 AVE
SW MARINE DR
SE MARINE DR
W 4 AVE
W BROADWAYE BROADWAY
MARINE WAY
E HASTINGS ST
W GEORGIA ST
3 ST W
3 ST E
KEITH RD E
MARINE DR
MT SEYMOUR PKWY
DOLLARTON HWY
MARINE DR
HASTINGS ST
BARNET HWY
ST JOHNS ST
COMO LAKE AVE
PIN
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ST MERID
IAN
RD
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LOUGHEED HWY
LOUGHEED HWY
LOUGHEED HWY
NEAV
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MCNEIL RD
LOUGHEED HWY
GAGLARDI WAY CLARKE R
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KINGSWAY
KINGSWAY
TENTH AVE
BYRNE RD
EIGHTH AVE
MCBRIDE BLVD
CANADA WAY
WESTMINSTER HWY
DELTAPORT WAY
ARTH
UR D
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72 AVE
88 AVE
104 AVE
96 AVE96 AVE
NORDEL WAY
RIVER RD
SOUTH
FRASE
R PER
IMET
ER R
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M A RY HILL B YPAS S
DEWDNEY TRUNK RDDEWDNEY TRUNK RD
240 ST
272 ST
CED
AR ST
STAVE LA
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ABERNETHY WAY
More then 5.2-million-square-feet of new industrial space proposed or under construction
Proposed industrial development plans in Richmond/Delta remain active
Address Project Name/Address Developer Size Construction type Estimated Completion
1 11115 Silversmith Place, Richmond Layfield Group of Companies Beedie Group 147,378 Development/ Expansion Q1 2016
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 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
13 3810 & 3960 Jacombs Road, Richmond Key West Business Centre Crestpoint Real Estate 271,388 (13 acres) Renovation N/A
14 1 8051 92 Street, Delta Buckingham Industrial Estates (Lot 7) Prism Construction Ltd./Bands-tra 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
Source: Avison Young
D e l t a
r i c h m o n Ds u r r e y
11
115
10
17
5
6
1213
16
2
7914
3
4
18
* Currently available for sale 1see number 8 on map for location
RIChmond & deLtA InduStRIAL SALeS tRAnSACtIonS (>$1.5 mILLIon) june 1, 2015 to deCembeR 31, 2015
ADDRESS MUNICIPALITYTRANSACTION
VALUESQUARE
FEET (SF)PER SQUARE FOOT (PSF)
DATE
2451 Vauxhall Place Richmond $1,930,000 10,252 $188 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
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 de-mand from investors and owner-occupiers motivates those seeking to relocate or expand to either prelease space in new projects or acquire suitable strata premises.
continued from page 1
© 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.
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Avison Young #2900-1055 W. Georgia Street Box 11109 Royal Centre Vancouver, BC V6E 3P3, Canada
Vancouver Industrial TeamKyle blyth 604.647.5088 [email protected] bougie 604.757.5115 [email protected]
jeron dillon 604.647.1330 [email protected] eakin 604.646.8399 [email protected] Farrell 604.646.8388 [email protected] Gritten 604.647.5063 [email protected] Kassautzki 604.646.8393 [email protected] Kerr* 604.647.5094 [email protected]
nabila Lalani 604.647.1342 [email protected]
john Lecky 604.647.5061 [email protected] Lehman 604.757.4958 [email protected] Leyland 604.647.1354 [email protected]
bennett Lutes 604.646.8382 [email protected]
Chad margolus 604.647.1357 [email protected] Patterson 604.757.4950 [email protected] Robson 604.647.1331 [email protected] Saddler* 604.647.5077 [email protected] Sunderland* 604.647.1346 [email protected]
Angus thiele 604.646.8386 [email protected] thies 604.646.8398 [email protected] thomas 604.646.8383 [email protected] Vera 604.647.8384 [email protected] Whitchelo 604.647.5095 [email protected] 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]
Source: RealNet & Avison Young
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