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The Dayhu Group of Companies is building its Boundary Bay Industrial Park in the heart of Delta with high ceilings and huge floorplates to meet the new e-commerce demand for big distribution centres that can accommodate large stores of inventory and the automated equipment needed to move it around. (The Dayhu Group)
The Dayhu Group of Companies is building its Boundary Bay Industrial Park in the heart of Delta with high ceilings and huge floorplates to meet the new e-commerce demand for big distribution centres that can accommodate large stores of inventory and the automated equipment needed to move it around. (The Dayhu Group)

Land use

E-commerce appetite puts pressure on industrial space Add to ...

A major tug of war over Vancouver’s closely guarded farmland is looming, as industrial users fight to find space to serve the new world of e-commerce, giant automated distribution centres come on stream and a population of potential workers has shifted to south of the Fraser River.

Developers and commercial brokers say the Lower Mainland economy is changing, making a lot of the area’s old-era industrial land – concentrated around the waterways that used to be key, and north of the Fraser where the workforce used to be concentrated – less useful.

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They are facing demand these days from clients such as Amazon.com Inc., Coca-Cola Ltd. and Costco Wholesale Corp. These new-style operations are looking for enormous tracts of land close to highways, near the expanding port in Delta and to the labour pool that has shifted and is looking for a shorter commute in the transit-poor area south of the Fraser River. As a result, brokers and landowners are making increasingly loud noises about the need to convert some of the agricultural land in those areas to industrial.

“E-commerce is growing at about 15 to 20 per cent a year. The way retail is going online requires facilities close to large populations,” says Chris MacCauley, senior vice-president at CBRE in Vancouver. “Our old industrial areas were serving where it worked back then. And we’ve just put billions into infrastructure [around the Delta port]. Does the land surrounding that make sense as agriculture?”

But any move to convert agricultural land to industrial use is going to face stiff opposition from Lower Mainland politicians who say a regional growth plan finalized last year put in strict boundaries for industrial land – and that’s where businesses should stay.

“There is a lot of potential industrial land around,” Richmond councillor Harold Steves says. “People should be buying that land. But farmland is 5 to 10 per cent of the cost of industrial land, so it’s a cheap fix.”

Mr. Steves and other municipal politicians say industry should look for other solutions – using land more efficiently by increasing the amount of building space per hectare and looking at places other than the Lower Mainland for uses such as distribution or warehouse storage.

The tensions around the issue were inflamed this fall when a leaked document to British Columbia’s cabinet suggested that the province was considering changing the authority of the Agricultural Land Commission, an independent agency set up in 1975 when the government of the day created an agricultural land reserve (ALR) system. That reserve designated about 4.5 million hectares of land as agricultural. The commission makes rulings on requests to remove land from the ALR.

There have always been requests to remove pieces of land here and there, for golf courses, residential developments or, in one case, rodeo grounds.

Ever since Deltaport, the once-small port that now handles almost half of Port Metro Vancouver’s container shipments, began expanding and since the province invested billions to construct a major new road system to serve it, there’s been a lot more interest in removing land from the ALR near the port and road system.

But Delta is also home to a lot of productive farms, which generate tens of thousands of dollars per hectare for everything from tomatoes for export to organic kale sold at local farmers’ markets.

A new development at the Boundary Bay airport has demonstrated for some the crucial need for – and interest in – new industrial developments near what’s called the South Fraser Perimeter Road, which runs directly to the port.

The 900,000-square-foot project by the Dayhu Group of Companies was not a conversion of agricultural land; the company purchased one of the few pieces of land available for commercial development. The Boundary Bay Industrial Park is already half-leased to the logistics firm Apps Express. Paul Tilbury, Dayhu’s chief operating officer, says there has been a steady stream of other companies interested in the 47-acre site, Phase 1 of which will be completed next year.

Dayhu is building the project with 10.9-metre-high ceilings and huge floorplates to meet the new-economy demand for big distribution centres that can accommodate large stores of inventory and the automated equipment needed to move it around. Mr. Tilbury said the intense interest in the Dayhu project illustrates the strong demand.

That rapid leasing matches what’s been happening elsewhere. The region saw 1.4-million square feet of new industrial space added between the spring of 2013 and the fall, but it was all taken up almost instantly and the region’s low vacancy rate for industrial space barely changed.

Industrial-land assessments have typically said the region needs about 100 hectares of new industrial land development a year to keep pace. But the recent absorption indicates the demand is actually much higher than that.

Mr. Tilbury doesn’t see how that kind of demand can be served by intensification or telling distributors to go to Kamloops or Calgary, as local politicians have suggested. A lot of the new demand comes from the e-commerce section. “They measure their success in delivery time,” Mr. Tilbury says. That means they want to be as close as possible to the big population centres.

And, even for those containers coming in to Deltaport, it doesn’t make sense to a lot of shippers to cart them by train hundreds of kilometres away to have them unpacked, sorted and repacked for shipment to the various points in North America for which they’re eventually destined.

And telling distributors to set up somewhere else means giving up work for people in the region.

“If you want to keep those jobs in the Lower Mainland, land needs to be available,” Mr. Tilbury says.

But the argument is far from settled. Even some people within the development industry think more can be done to use existing industrial land more efficiently or to find other places for giant warehouses than profitable farmland.

“Does the Lower Mainland really want or need this kind of development? Some would suggest it is not in the long-term best interest of the transportation corridor, nor for the livability of the [region],” wrote Robert Landucci, the CEO of an inland port, Ashcroft Terminal, in a recent industry publication.

Other industrial property owners-managers also quietly suggest that not everyone in the development world is in favour of what some of the louder voices are asking for.

“The development community as a whole should not be placed in the ‘down with ALR’ camp,’ ” said one. He didn’t want to get into a public fight with his development colleagues, but he made the case via e-mail to The Globe and Mail that if farmland is taken out to serve industrial needs now, all it will do is defer the need to find ways to create more intensive uses of land as the population keeps growing and the region keeps grappling with its natural limitations – mountains, sea and the United States border.

And, by that future point, he said, the region risks that “we will no longer have these greenspaces and our habitat” if it starts giving farmland away now.

 

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