- What The Campbell Heights industrial submarket of Surrey, B.C., is seeing a slowdown
- Why Overbuilding and tariff threats are playing a role
- What next The economy and the area’s uncertainty are causing developments to be paused
Market movement seemingly has been paralyzed in the Metro Vancouver industrial submarket of Campbell Heights, as oversupply and economic threats hang over the area.
Campbell Heights, a 1,900-acre industrial and business park in Surrey, sits less than 8 km from the Canada-U.S. border. It’s home to an Amazon hub, construction companies and transportation services, among many others.
In a submarket heavily reliant on distribution to the U.S., sales prices have dropped up to 20% over the past year as landlords have difficulties leasing up, brokers tell Green Street News.
Looming tariff threats
As to be expected, the threat of tariffs seems to be playing a role in freezing up movement.
“When the U.S threatens these tariffs and Canada threatens them back, impacted businesses and their respective employees get harmed from both sides,” one broker said. “With that in mind, significantly fewer entities have been looking to actually make a move.”
Those tariffs are on top of existing headwinds the market has faced prior to the threat of tariffs, causing the cancellation of sale and lease contracts as well as spending cutbacks.
The uncertainty is causing hesitancy, limiting the number of potential buyers.
“Your general buyer pool is so much more shallow,” the broker said. “Someone really has to be divested to acquire a large asset right now.”
Industrial strata sale prices for distribution-oriented product in Campbell Heights, the broker said, have dipped to below $500/sq ft from a peak of $650/sq ft in 2022 — a 23% decline. By comparison, similar product in West Abbotsford, a comparable industrial submarket 30 km east, has gone to approximately $420/sq ft from $500/sq ft in 2022 — a 16% decline.
Supply surplus
But others say the problem in Campbell Heights is that the region has too much supply.
“This is the only area that’s had large-scale development over the last several years because it has an availability of land,” said Chris MacCauley, an executive vice president specializing in industrial assets at CBRE. “Campbell Heights overbuilt, and it overbuilt quickly.”
The trend began about a year ago, MacCauley said, noting that Campbell Heights is a secondary market due to its distance from major highways. Such markets are the “first to contract and the last to come back,” he said.
The region’s strata space is selling the most, while owners of larger developments seek to lease up.
The market slowdown is now leading some developers to pause their projects.
“We had about 5m sq ft this year of industrial product under construction and delivering,” MacCauley said. “Next year, we’ve got about 2m sq ft.”
With questions still in the air about where the economy is going, people aren’t making decisions, he said, adding sale pricing has dropped 10% to 20%.
