Prologis is doubling down on Canada.
The global logistics real estate investment trust acquired its first Vancouver asset in March, a 289,000 sq ft Class-A industrial building in the Vancouver suburb of Delta.
Now the company is looking for space to open its first office in Vancouver.
The city’s port, one of the largest on the West Coast, and its proximity to the United States border both factored into the trust’s decision to expand in Western Canada.
Green Street News caught up with Patrick Gemma, head of capital deployment, and Bill Bates, VP and investment officer for Canada, at the Vancouver Real Estate Forum to talk about the expansion.
Prologis recently entered the Vancouver market. What went into that decision?
Gemma: Canada’s pro-business mindset, steady economy and access to global markets make it a very attractive place to do business.
For Vancouver, being home to Canada’s largest port, and its proximity to U.S. markets like Seattle and the San Francisco Bay area make it ideal for logistics and distribution.
Further, [Vancouver] has the key characteristics we look for in markets with strong long-term rent growth, land constraints, historically low vacancy, and a consistent demand for modern, sustainable and well-located logistics facilities.
As the global leader in logistics real estate, we have deep expertise developing projects in key markets that support local, regional and national businesses and contribute to a vibrant local economy.
You’ve said there is a need for Vancouver to modernize its logistic facilities. Can you elaborate?
Bates: I think modernization starts with meeting the baseline expectations of today’s logistics customers.
As Patrick mentioned, we’re operating in a highly dynamic logistics environment, yet only about 10% of the Vancouver market offers facilities with clear heights of 32 feet or more. That’s below what’s needed.
‘Prologis’ first acquisition here is a good example of what modern logistics facilities should look like’
Prologis’ first acquisition here is a good example of what modern logistics facilities should look like: high clear heights, trailer parking, secured shipping areas, flexible demising options, and a quality build by a strong constructor.
On top of that it has a prime location near Deltaport, [which is] key for efficiency. That’s the kind of holistic modernization we’re talking about – facilities that reflect both an operational functionality and a location advantage.
The challenge now is land: sourcing enough of it to build more of what the market needs.
Where are the sweet spots in Vancouver for you?
Gemma: We take a disciplined approach when deploying our capital. Because the land supply is low and the demand high, we’ll evaluate any significant opportunity in a market that might be right for our customers.
In this region, our focus is primarily on the key submarkets of Richmond, Delta and Surrey.
How has the reception been in Vancouver so far?
Bates: We are thrilled to be here and there has been a lot of positivity about Prologis joining the market, especially from our customers.
As I mentioned on the panel, our core focus at first will be development.
