From a recent conference on land and development Gallagher said there’s been rapid escalation in industrial land and construction costs and there’s a scarcity of quality, well-located and easily accessible industrial land in Canada.
Tong thinks there’s “more juice” in industrial rental rates. He doesn’t think the market will slow down because vacancies are so low and demand is so high in core cities.
Concert just completed a lease renewal with a 120,000-square-foot industrial tenant that saw its rent increase from $7 to $18 per square foot, with escalations built in, so Tong believes the asset class “still has a lot of legs.”
Gallagher said large industrial developers operating in multiple Canadian markets will search out less expensive opportunities. He cited how much cheaper it is in Calgary than Vancouver as an example.
“I can get a great facility, great labour and all the land that I need, so I think Calgary is going to continue to be the Western Canadian hub for industrial,” he explained. “I think Vancouver will be a great location, but because there’s such a little supply of land it’s not going to attract the large logistics facilities.”