Another strata office/light industrial building is under construction in Vancouver’s Mount Pleasant neighbourhood. And while the project will be a welcome addition for tenants fleeing a tough downtown market, it’s not the kind of building that will ease the city’s overall industrial vacancy crunch, insiders say.
Earlier this month, Chard Development officially broke ground on The Yukon.
It’s a 49,000-sq.-ft. strata office and light industrial building that will rise four storeys and will have units from 1,000 to 10,000 sq. ft. at the corner of Yukon St. and West 6th Ave. — the former site of the 3 Vets outdoor equipment store. The building is expected to complete in late 2020.
The Yukon is Chard’s fifth project in the area and second strata office and light industrial development. It follows their completion in January of a similar building in the area called 34-W7 (also designed by Proscenium Architecture).
Several other buildings with a mix of office and industrial workspace have either recently completed or are under way in the City of Vancouver, including, among others, The WorkSpaces at Strathcona Village on Hastings St.; Ironworks on Victoria Drive; and IntraUrban Evolution at False Creek Flats – a 105,000-sq.-ft. multi-storey stacked industrial building that will include upper-level warehouse spaces.
At 34|W7, most of the buyers were Vancouver-based companies who had been operating for decades, said Byron Chard, president and CEO of Chard Development.
Smaller light industrial space like these are mainly aimed at creative companies that need some storage or racking systems, plus a mix of office owner/users, he said.
He called it a “niche product” that isn’t really tailored to respond to Metro Vancouver’s critical shortage of industrial logistical space related to port activity and distribution.
The City of Vancouver’s industrial vacancy rate has never been lower, and now sits at one per cent.
“You need diversity of supply, and this is adding to that diversity in the light industrial and the office market,” Chard said. “It adds that different element in for buyers or for end users or companies to consider as an alternative.”
The building was designed by Proscenium Architecture and is being built by Ventana Construction. Chard is a B.C.-based developer mostly active in Victoria and Vancouver.
The entire main floor of The Yukon will be used for light industrial, said Matt Carlson, a vice-president with Colliers International, the listing agency for the building.
He said a portion of the second floor will also be industrial and the rest of the building will be designed as office.
“The main floor is definitely different,” he said. “The ceiling is much higher. It’s at least six feet higher on the main floor.”
That space is designed to accommodate a business like a coffee roaster or craft brewery, he said.
The main floor has not yet been sold, Carlson said. “We’re hopeful that we see a nice creative use like (brewing). That would be great.”
He said there is demand for more buildings like this in the Mt. Pleasant node. Colliers estimated that 5,000 to 8,000 new workers will be added to the neighbourhood once all the buildings that are under development complete.
Meanwhile, industrial land prices have surged so high in recent years that modestly sized owner/users have been pushed out of large-scale purchases by developers, said Russ Bougie, a principal and industrial specialist with Avison Young in Vancouver.
In a recent report, Avison Young said 2018 had the second fewest industrial deals (47) in the City of Vancouver since 2010, but the total dollar volume for those deals set a record at $295.6 million.
Bougie said a few massive deals, including Hungerford Properties’ purchase of 86 SE Marine Drive and 101 East 69th Avenue for $90.4 million from Walmart Canada, skewed those numbers. But the fact remains that most small businesses have to look for strata projects if they want to get into the market.
However, this year could see fewer large transactions for industrial property as developers take a wait and see approach to the land market. “I think it’s going to be a quiet year for trades,” Bougie said.
He said buildings, like the one by Chard, are more of a response to the tight downtown office leasing market than to the region’s industrial shortage.
“It’s more office-oriented type users,” he said. “Offices and showrooms and that sort of thing. It’s not really a solution to the distribution-type users.”