- What Kelowna has seen a 28% increase in its vacancy rate
- Why Roughly 263,000 sq ft of new space has hit the industrial market this year
- What next Investors and businesses are delaying purchases while monitoring market conditions
Vacancy rates in the Greater Kelowna industrial market have ticked up as more supply and shifting economics hit the market, Colliers said in a new report.
With numerous small-bay projects being finished, an additional 263,000 sq ft hit the region’s industrial market, bringing the vacancy rate to 4.1%, Colliers said, a 28% increase over last year.
“An additional 456,000 sq ft of industrial inventory is currently under construction, making it unlikely that vacancy rates will drop in the coming quarters,” the firm added.
However, that’s not had much effect on lease rates, which have remained stable for the time being, with an average asking net rent of $16.78 per square foot, Colliers said.
Building sales totaled $41m, though land transactions have tallied only $8m, down 67% from the previous year’s $24m.
Colliers said the Kelowna market is showing signs of “resiliency” and shifting towards “smaller, more adaptable industrial spaces.”
Kelowna itself saw more than 263,000 sq ft of new supply come online with an additional 386,000 sq ft under construction. The city saw a net absorption of 178,000 sq ft with 484,000 sq ft of vacant space.
Meanwhile, the Greater Kelowna area, including West Kelowna, Lake Country and Peachland, had a net absorption of 247,000 sq ft and 557,000 sq ft of vacant space.
Though there is limited availability of land for industrial development in Kelowna, prices steadied.
“Despite this scarcity of supply, the prices of available land have begun to level off; buyers are opting to hold off on purchases in anticipation of more suitable options coming to market,” the brokerage said.
“This cautious approach is also due to the lending environment, interest rates, and costs of construction, which are leading buyers to delay purchases until more favourable market conditions emerge.”
The largest building sale was for a $4m sale of a property at 630 Beaver Lake Road in Kelowna totaling 20,000 sq ft. The valuation worked out to $197/sq ft.
The largest land transaction during the period was also a $4m deal for a more than 2-acre parcel in Rutland North.
