Marine Landing Sees Fresh Demand After Vancouver’s Zoning Update

February 29, 2024 / in ,

Updated industrial zoning by the City of Vancouver has unlocked new potential for mixed-use urban buildings designed to meet the workspace demands of the market today and in the future.

In February, the City updated its I-2 zoning bylaw to allow more diverse office uses to operate in industrial-office projects, adding businesses like medical, dental, legal, accounting, real estate, insurance and other types of typical office work.

Mostly gone are the days of inner-city industrial buildings spewing pollution and noise; such facilities have been replaced by cleaner, high-tech, low-impact light or digital industry that complements other office users and services.

The city’s new office use category for the common I-2 zoning paves the way for vibrant, stacked urban communities that blend more office users with industry and services in transit-oriented nodes of production and commerce.

Workspace experiencing softer demand, which spells opportunity

The regional industrial market has been experiencing softer demand amid high interest rates, economic turbulence and general uncertainty, and that’s not necessarily a bad thing, depending on your perspective. In the last quarter of 2023, the Vancouver industrial market inched towards normalization. Vacancy in Q4 climbed to 1.4% with availability reaching 3%, the highest it has been since 2017, according to Colliers’ Vancouver Industrial Market Report.

While the supply-demand situation remains far from balanced, there are more opportunities today for industrial users to attain the space they want, compared to 2022 when vacancy was near zero.

Marine Landing showcases stacked innovation and sees renewed demand

Wesbild’s Marine Landing project is one of the country’s largest stacked, mixed-use industrial communities. Under construction, the strata project includes a pair of six-storey buildings developed in partnership with KingSett Capital.

The buildings will add 242 light industrial and office strata units for a total of 340,000 square feet of job space. Located just south of Marine Drive, Marine Landing is a short walk or bike ride to the Canada Line station. The flexible strata workspaces range from 600 to 34,000 square feet, with the lower four levels of each building hosting light industrial, and the top two levels built for office use. The zoning change applies to 120,000 square feet of office space in project.

Under the previous zoning rules, roughly 80 businesses had expressed interest in buying office units at the Marine Landing, but were not able to operate in the buildings. The changes have already prompted several sales including to a chiropractic clinic, physiotherapy clinic, law firm, and several other office users.

Buildings like this, supported by modernized zoning, represent the future of urban industry in Vancouver and other parts of Canada. Nationally and locally, industrial land is limited. That means urban industrial developments must be designed taller to maximize land use, and ideally, should be located on sites close to transit, services, food and homes. Projects like Marine Landing can provide many of those services and necessities that workers in the building and others in the neighbourhood would require.

At the Marine Landing site, the previous building would have supported 30 or 40 workers. The new buildings, once they complete for occupancy this year, will accommodate hundreds. For business owners, Marine Landing allows them to be their own landlord, and to build equity into their space and into their business. For investors, it’s an opportunity to diversify into the industrial and/or office asset classes.

Urban industrial must elevate to meet new expectations and needs

Owners and tenants now expect a higher level of convenience, amenities and services at stacked, urban industrial buildings.

Breka Bakery & Cafe, for instance, selected Marine Landing to set up a cafe and a facility that will supply their many 24-7 locations around the city. Several buyers at Marine Landing have referred to the Breka plans as among the reasons to buy.

Other light industrial developers can look to Marine Landing as an example of how to design and arrange a stacked, urban building so that it remains efficient and convenient for a variety of businesses.

For example, Marine Landing required loading to the upper industrial floors to be extremely easy. In this case, three massive freight elevators in each of the buildings allow multiple trucks to load or unload at the same time.

The elevators are large enough to wheel pallets in and out to supply the upper units, and all the walkways are a minimum of eight feet wide, allowing for two pallets to pass each other without disruption. Most industrial units have roll-up garage doors, even on the upper floors, and the building has 400 parking stalls, including a full level of underground parking.

Since many of the users will be office workers, it’s essential to give them a first-class experience like what they can expect in a quality downtown high-rise. In this case, Wesbild included a rooftop deck that’s available to everyone and includes a barbecue area, grass landscaping, a dog park, and recreation and social space. The buildings also feature a fitness centre, showers, change rooms, and multiple amenity rooms.

While the global office market has faced challenges, developers of new office inventory can look more optimistically at a market that is increasingly seeing a return-to-office movement as pure-remote work appears to be waning.

As of Nov. 2023, only 12.6 per cent of the workforce aged 15 to 69 years old were working exclusively at home, according to data from StatCan. That number had fallen from 20.1% in May 2023.

Softer industrial market likely fleeting

The softer industrial market could prove to be fleeting with interest rates expected to stay flat or decrease beginning in mid-2024, pulling companies off the sidelines. Only four per cent of the Metro Vancouver and Fraser Valley land base is dedicated to industrial land, even though that land supports 27 per cent of the region’s employment opportunities, according to a 2023 report by Greater Vancouver Board of Trade and NAIOP.

Now that borrowing rates have levelled off, businesses can start making plans with more certainty. Interest in industrial space of all kinds is already picking up and it won’t take much demand to start to tip the scales back towards a critical shortage of essential, economy-fueling job space.