“There is a huge appetite for industrial income producing product, which has been increasing over the past few years. The key drivers for investors are tenants with good covenants in long-term leases or rental upside potential in markets with low vacancy. It goes without saying the biggest demand is for Class A, high ceiling distribution space or newer multi-tenant facilities. With these in short supply, there is also a lot of demand for older multi-tenant buildings with low vacancy.”

Like any investment, there are always a number of factors to consider before you sign the dotted line. From surrounding infrastructure to location, look for key demands that are currently driving the market.

Ceiling heights: Depending on the type of tenant you want to attract, ceiling heights are always an important consideration. In general, 26’ ceilings are often sufficient for companies that need less than 50,000 square feet. However, larger users typically require 32’ to even 40’. Retailers who are doing their own distribution typically fall into this category, as do third party logistics companies, who require flexibility with their storage as contracts are won and lost.

Chris MacCauley, Senior Vice President at CBRE Limited, is seeing even greater demand. “Automation groups are now looking at 40’ to 60’ ceiling heights. However, the issue in some industrial areas will be the poor soil conditions that will prohibit these heights or higher, or require substantial expense that may make the building not financially feasible.”

Strata: In Western Canada, the industrial real estate industry is made up of two types of markets: those that are owned (called strata in B.C.) and those that are not. While some feel strata limits tenants, others believe it helps create a more stable market.

“A typical profile of a strata purchaser is a local owner occupier or investor, as national companies or foreign investors to date have not been active in the strata market. The bulk of strata buyers are purchasing unit sizes under 5,000 square feet, and very few over 15,000 square feet,” said MacCauley. “Strata also gives an investor the opportunity to own industrial real estate at a value that may be more palatable,”