Industrial Land Shortage in Kelowna?
Is There a Shortage of Industrial Land in Kelowna?
When you hear someone talking about the industrial market in Kelowna, you often hear comments like it’s a tight industrial market or there is a shortage of industrial land. But is it true?
Kelowna Industrial Land Base
In total, it is estimated, that the City of Kelowna has a current industrial land base of approximately 1,200 acres. This includes all land that is currently zoned as industrial land. But of the total industrial land base, almost 920 acres (77%) is already developed for industrial uses. The remaining 280 acres is what is actually vacant or underutilized.
On the surface, with 280 acres of underutilized industrial land, it would appear that there is an actual shortage of industrial land available for development. However, there is approximately 450 acres of additional land that the Kelowna OCP designates as industrial land that has yet to be rezoned as industrial. This brings the total to 730 acres of land that could be used for industrial development in Kelowna.
A shortage in industrial land, no. What there seems to be is a shortage of is quality industrial opportunities. Much of the industrial land that is vacant or underutilized is being held as longer term holdings and therefore in the most part is unavailable.
Searching for Industrial Land
Kris McLaughlin, a second-generation commercial specialist with the MCL Real Estate Group in Kelowna relishes the search for industrial land.
“Close to 70% of our business is finding properties that don’t have a real estate sign in the ground or aren’t currently being marketed” says McLaughlin, “We are in touch with the market and regularly reach out to landowners and landlords to find properties that match our client’s requirements and to gauge potential interest in selling.”
Evolution of Kelowna’s Industrial Market
Kelowna’s industrial market is starting to evolve. Over the years there has been a definite shift in the market away from larger format, heavy industrial uses. The closing of the Hiram Walker, Western Star Trucks, Enterprise Steel, N.A.P. Windows and more recently OK Builders and the Tolko Mill are some of the larger format industrial users Kelowna has lost.
The loss of some of the heavy industrial use has opened the door for more lighter industrial uses such as contractor uses, research and development companies, high-tech firms, cannabis companies, warehouses and other small to medium bay users.
“There has been a push towards a cleaner business park-type look” says McLaughlin. “We have seen 7 small and medium bay complexes added to the inventory over the past couple of years year, with an additional 7 complexes currently under construction (totalling 93 bays) and 6 more in the proposal stage (totalling 89 bays).” added McLaughlin.
Urgent Demand for Small & Medium Bay Industrial Units
Kelowna’s industrial market is starting to evolve. Over the years there has been a definite shift in the market away from larger format, heavy industrial uses. The closing of the Hiram Walker, Western Star Trucks, Enterprise Steel, N.A.P. Windows and more recently OK Builders and the Tolko Mill are some of the larger format industrial users Kelowna has lost.
The loss of some of the heavy industrial use has opened the door for more lighter industrial uses such as contractor uses, research and development companies, high-tech firms, cannabis companies, warehouses and other small to medium bay users.
New Complexes Well Received – But Come at a Price
Reception to these new small and medium bay complexes has been phenomenal with most complexes being almost completely pre-sold before the complex is complete. However, these new industrial strata units come at a price. The new IntraUrban Enterprise complex on Dilworth Drive is over 85% sold at prices close to $300/SF, including this price being charged for mezzanine space as well. Another new industrial strata complex in Kelowna’s Downtown North-End, the Powerhouse at Packer’s Junction is asking some of the highest prices for industrial strata units ever seen in Kelowna, at $400/SF. Currently they have pre-sold only 12%, which has led to the developer to ask the City of Kelowna for a text amendment to the allowable different uses on its industrially zoned property. They are hoping for a change to allow more commercial uses, such as drop-in clinics, pharmacies, retail stores, or salon/spas that are not currently identified as allowable uses for the I4 industrial zoned property.
Erosion of the Industrial Land Base
This growing pressure for more non-industrial uses on existing industrial land will slowly erode the industrial land base. The City of Kelowna needs to look carefully when considering the expansion of commercial use of industrial lands. Many retail and office uses have options for where they can locate (albeit at a higher land or rent cost), but industrial uses do not. The City should be working to better protect the existing inventory of industrial land and reduce the amount of non-industrial uses of industrial land, at least at street level.
“We expect to see growth in Kelowna’s industrial market to come through approaches that intensify and densify industrial land use.” says McLaughlin. “Expansions on exist industrial properties such as 2120 Leckie Place or 710 Stremel Road where additional industrial buildings have been added to the respective complexes. And through the development of more small to medium bay complexes on existing industrial land.”
It’s an interesting time in Kelowna’s industrial market. To further discuss industrial trends or if you are looking for industrial land or space contact Kris McLaughlin with the MCL Real Estate Group – RE/MAX Kelowna at 250 870 2165 or by email at kris@mclrealestate.ca
MCL Real Estate – Industrial Market Outlook
The Kelowna industrial real estate marketplace continues to evolve, driven by higher demand, higher competition and reduced available inventories. Eagerly anticipated new industrial inventory is still years away, but there is a lot going on in Kelowna’s Industrial Market.
The MCL Real Estate Group has just released their Kelowna Industrial Market Outlook for the Year End 2019. The report provides an in-depth outlook on trends, news and analysis of the Kelowna Commercial Real Estate Market.
Follow this Link to Read the Year End Industrial Market Outlook!
