Metro Vancouver’s supply of vacant industrial lands is declining rapidly. The industrial land shortage has already limited regional economic growth for some important logistics sectors that serve container traffic flowing through the Port. There have been significant lost economic opportunities associated with logistics firms reacting to the land shortage by locating a larger share of their facilities at inland locations, particularly Calgary.

Over the last fifteen years, the dominant trend in the North American logistics sector has been a dramatic growth in warehouse sizes and efficiency to take advantage of economies of scale. Fifteen years ago, a 400,000 square foot building was considered large. New buildings are now often over 1 million square feet in size. These large buildings require large flat sites, near major highways, to accommodate the volume of truck traffic required to service them, and to accommodate short term storage of trailers.

The Lower Mainland has lagged in this trend and has had no distribution centre facility larger than 650,000 square feet constructed since 1982. There is very strong current and future demand for well-located industrial sites which have been filled, serviced, zoned, and are ready to build, either for speculative construction to serve the mature core transload market, or to attract companies on the leading edge of supply chain practices. Retaining and developing an expanded industrial land base would help satisfy both local and regional demand and keep the many economic benefits associated with logistics in B.C. rather than outside the province.

In fact, land availability drives the absorption rate for industrial property in the Lower Mainland. With international trade and the Port being one of the strongest drivers of the economy the availability of suitable land for logistics purposes exacerbates a very tight supply of land that is available to support business growth. As a result, the Vancouver region has also lost business to Alberta over the years because of the lack of availability and not just firms in the logistics sector.

On the North American West Coast, imports from Asia have been the primary driver for growth in the logistics sector. This has led to the development of a sophisticated network of transportation services and distribution centres to facilitate the delivery of imported goods from West Coast ports to major inland markets. This analysis has determined that in the Lower Mainland the logistics industry serving the Port has focused primarily on import transload facilities, which transfer cargo from international to domestic containers to efficiently move it to inland locations for further processing. Capital investments in the broader range of distribution services for imports – and in major warehouse facilities – have taken place inland. The restricted availability and high prices of market-ready industrial land have created a very competitive value proposition for Calgary as the preferred location for large-scale warehouse and distribution facilities, where value added activities are performed in Western Canada. The rate of recent logistics sector growth in Alberta has significantly outpaced B.C.’s.

Port users have indicated that an ample supply of vacant industrial land is critical to building and expanding their facilities and for allowing them to add increasingly sophisticated logistics services demanded by the market. Without an expanded, full-service logistics industry to complement the port and respond to anticipated growth in trade through the West Coast, customers may be increasingly attracted to larger ports with a wider variety of services available such as the Ports of Los Angeles and Long Beach. If current trends continue the Lower Mainland region may not only lose some of the employment benefits associated with current value-added logistic activities, but existing firms may be unable to expand their facilities to remain competitive with competing gateways.  Suitable industrial sites will be required to enable firms to develop facilities of sufficient scale and scope in the range of logistics services required by emerging customer needs.

Download Preserving Industrial Lands to Meet Traffic Growth in the Port of Vancouver.

Preserving Industrial Lands to Meet Traffic Growth in the Port of VancouverCILTNA_Pacific_160621

About the Author

cp_admin

Leave a Reply

Your email address will not be published. Required fields are marked *