A new report finds the supply of industrial land will drop while the supply of commercial space will rise in Greater Victoria.
The report prepared by CBRE — which once operated under the name Coldwell Banker Canada — finds industrial investments by both local and off-island developers on the rise with effects on supply of industrial land.
An already scarce commodity, the report forecasts that the availability of industrial land will further drop in 2021 with the forecasted rate reaching 0.7 per cent by the end of 2021. In 2019, the availability rate was 1.7 per cent, in 2020 one per cent. Not surprisingly, forecasted rents on industrial land are rising, as are sales prices relative to 2019 and 2020.
By contrast, vacancy rates for office space are rising with CBRE forecasting a vacany rate of 7.1 per cent for Greater Victoria for the end of 2021. In 2020, the vacancy rate was 6.6 per cent and 4.6 per cent in 2019.
The report points to a long-running development: the continuous growth of the West Shore relative to the core communities. According to the report, developers continue to shift their focus towards municipalities said to have what the report describes as “more development-friendly policies.”
The report said recently completed upgrades to the Highway 1 McKenzie Interchange and improvements currently underway to the Highway 14 corridor “underscore efforts” to increase accessibility to the suburban areas west of Victoria. “Factors including (working from home) flexibility, desire for more space, and better affordability have further accelerated the migration of demand to the West Shore and Sooke areas,” it reads.
The report also looks into the state of the local hotel industry, said to “hopeful for a market rebound” despite occupancy rates below 30 per cent and some operators closed because of COVID-19.
Overall, the report finds Victoria’s commercial real estate sector has weathered the effects of the COVID-19 pandemic better than other markets.
“The more severe effects experienced in other markets were largely mitigated by the combination of a strong public sector and a diversified private sector along with Victoria’s growing tech industry,” it reads. “Ramped up vaccine rollout and government stimulus are expected to provide further market stability.”
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