Metro Vancouver’s industrial market gained confidence from investors in the third quarter, reports Avison Young.

The Fall 2013 Metro Vancouver Industrial Overview states that there have been 1.4 million square feet of new industrial product added to the market in the last six months. However, this has provided minimal relief to the market, as Vancouver’s vacancy rate has risen to 3.9 per cent.

Since fall 2012, the vacancy rate has risen just 30 basis points — from 0.3 per cent — despite the addition of more than 3.4 million square feet of new inventory in the last year.

“Vacancy in large-floorplate modern distribution buildings has remained exceptionally tight in all markets,” says Rob Gritten, principal at Avison Young. “Specific requirements — those greater than 100,000 square feet — in Metro Vancouver’s traditional industrial submarkets remain a challenge to accommodate.”

Gritten also indicated that increases in five and 10-year Canadian bond yields throughout much of 2013 have impacted interest rates. These increases have had a moderating effect on industrial sales activity.

Metro Vancouver’s availability rates have remained at less than five per cent. Much of the vacancy represents older, less efficient space that requires investment or redevelopment. The lack of industrial land has drawn concern from industry members, the port authority, and local and provincial governments.