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1100 Patricia Blvd. | Prince George, BC Canada | V2L 3V9 | Tel: 250.561.7633 | www.investprincegeorge.ca 1

Prince George 2015 Industrial Warehouse Market

June, 2015

1100 Patricia Blvd.Prince George, BC, Canada V2L 3V9Tel. 250.561.7633www.investprincegeorge.ca


Table of Contents

1 Introduction……………………………………………………….................... 2

1.1 Background…………………………………………………………………………. 2

1.2 Purpose…………………………………………………………………………………. 2

2 Methodology………………………………………………………………………. 3

2.1 Data Gathering and Warehouse Criteria………………. 3

2.2 Comparative Analysis and Measurements…………. 4

3 Results……………………………………………………………………………………. 5

3.1 2014 Warehouse Vacancy Results……………………………. 5

3.2 Analysis of Warehouse Quality…………………………………. 7

3.3 Light Industrial Site Pressures and Trends…………. 8

3.4 Benchmark Facility………………………………………………………….. 8

3.5 National Vacancy Rates…………………………………………………. 10

3.6 Rent Costs…………………………………………………………………………….. 11

4 Strategies………………………………………………………………………………. 11

4.1 Tracking Inventory………………………………………………............. 11

4.2Current Site Expansion, Renovation and Built-to-Suit Options….....................................................................

11

4.3 Brownfield Development and Infill…...……………………. 12

4.4 Greenfield Land and Infill Development……………….. 13

4.5 Municipal Tax Advantage……………………………………………. 13

4.6 Industrial Warehouse Sharing Market………………….. 14

5 Conclusion……………………………………………………………………………. 15

6 Next Steps……………………………………………………………………………. 15

7 Appendix………………………………………………………………………………. 16

Appendix A. Building Permit Totals and Value..…………………………… 16

Appendix B. Vacancy Locations…………………………………………………………… 18

Disclaimer: The data provided in this document has been collected from a variety of sources and is deemed to be accurate and up-to-date at the time of publication. Please report errors or omissions to City of Prince George - Economic Development. City of Prince George - Economic Development does not accept responsibility or liability for information and those using the material should verify it with other sources to ensure that it is correct and current.


I. Introduction

1.1 Background

Prince George is the largest city in Northern British Columbia. Supported by a trading area population of over 300,000, it is also one of the fastest growing regions in the country. The Prince George economy grew at 4.7% from 2010 to 2013, almost double the provincial growth of 2.4% in the same period. Strong economic growth has led to existing businesses expanding and new businesses establishing locations in the city.

The availability of light industrial land that is adequately zoned and serviced facilitates further business growth. Prince George has a well-planned light industrial land base, however, local realtors and businesses have stated that demand for warehouse space is currently exceeding the supply that is available.

First, local realtors have expressed that new businesses are struggling to find existing warehouse space. Growth in the number of distributors and suppliers of products to the energy industry, natural gas, oil and electricity requires the establishment of industrial warehouse facilities in Prince George. As a result, this shortage of supply is not meeting industry needs or facilitating opportunities for growth.

Second, local businesses have also conveyed an increasing difficulty to find warehouse space. In 2014, City of Prince George - Economic Development Economic Development Corporation (CPG) underwent an extensive interview program with local businesses, which also confirmed the gap between warehouse supply and demand. When asked directly about expansion plans, one-third (51) of the companies interviewed expressed plans to expand by 2017. In addition, 23 companies surveyed indicated that their current site was inadequate for their plans to expand in Prince George. 12 companies specifically identified the lack of suitable premises as a major constraint on expansion.

Finally, industrial growth indicators have also demonstrated an increasing demand for warehouse space. These include:

• Low unemployment rate: 4.90% (2014)• High employment rate: 67.10% (2014)• Increased transportation and warehousing location counts: 547 (up 15% from 2010 to 2013)• Local construction: 509 Building permits worth $125 million (2014)• Major regional project investment: Capital expenditures proposed in central and northern BC totals $162 billion

(as of June 2014)

1.2 Purpose

Based on 154 face-to-face interviews between CPG staff and local businesses, a number of strategic directions were compiled into the 2014 Prince George Business Retention & Expansion (BRE) Strategy: Final Report. One strategy identified as important to the success of industrial service and supply companies in Prince George was to “explore ways to improve supply of appropriately zoned land and


leasable building space”.1 Accordingly, CPG is undertaking the following to address this concern expressed by businesses.

1. Track the availability and quality of industrial warehouses on an ongoing basis.2. Conduct research on industrial markets in comparable communities, including comparisons of land values,

lease rates, taxes and regulations, in order to inform discussions with industry stakeholders and the City.3. Engage with local companies and organizations involved in real estate development and construction to

discuss challenges and identify prioritized list of action items that be addressed.

An Industrial Warehouse Market Report will satisfy these three action items in order to confirm if a lack of quantity and/or quality of leasable building space exists. Similarly, in 2013 and 2014 CPG completed the Downtown Occupancy Study to track commercial office and retail/service vacancy rates in the Central Business District in order to assist with fact-based decision-making for targeted downtown revitalization. The industrial warehouse-based study will provide an equivalent analysis. The findings of this report should assist in the formulation of strategies to expand available warehouse space in Prince George, if required. It should also serve to inform buyers and developers of existing conditions in Prince George.

II. Methodology

2.1 Data Gathering and Warehouse Criteria

To fully capture the industrial warehouse market in Prince George, CPG has taken the following steps to assess current conditions and propose solutions with this report:

1. CPG compiled the total inventory of existing warehouse buildings.2. CPG identified listed warehouse space for lease or sale in nine municipal industrial parks plus other City of

Prince George areas to determine vacancy rates for individual industrial areas and the city as a whole.3. CPG assessed the quality of inventory and current availability to measure the supply of existing industrial

space.4. CPG estimated the buyer demand in the form of a representative benchmark warehouse facility.5. CPG estimated a range of asking net rents for the local market.6. CPG identified construction cost factors and outlines representative benchmark warehouse facilities in

demand for Prince George.7. CPG identified opportunities and challenges for short and long term success, with possible solutions based on

best practices in the North American industrial market.8. CPG developed a list of next steps to execute the findings of this report with the appropriate stakeholders and

community partners.

Prince George has nine unique industrial parks that have been included in this warehouse inventory. An additional pool of all other industrial warehouses in Prince George that are appropriately zoned and functional has also been included in the inventory total.

1 Prince George Business Retention & Expansion (BRE) Strategy: Interview Results and Strategic Directions, page. 25.


The data information and collection for the inventory has been obtained through a number of sources:

1. The 2014 Revised Roll Building Information Report (BIR) for the City of Prince George, provided by BC Assessment.

2. Visual and qualitative analysis of the industrial warehouses in the city using the PGMap Orthophoto (Spring 2014) and parcel details.

3. Google Maps Street View for visual assessment and confirmation.4. BC Assessment e-ValueBC database information.5. Phone confirmations for industrial warehouse locations and occupancy status.6. Site visits where necessary.

This report has adopted the methodology framework of similar Canadian markets with existing industrial warehouse studies. Nearly 500 warehouse buildings were included in the inventory based on the combination of the following characteristics:

• Location• High ceilings• Loading docks• Supporting office space• Outside storage space• Trailer access• Zoning• Current use and function

The following warehouse buildings have been omitted from this study:

• Big box stores such as Costco, Home Depot and Canadian Tire have not been included due to their retail focus and highly visible locations.

• Saw Mills have not been included in the inventory because these facilities usually need extensive renovation to re-purpose for another tenant.

• Mini and personal storage facilities have also been excluded.• The BC Hydro Regional Field Office is excluded as well, as this report aims to measure the private sector

market supply and demand.

The total inventory is the aggregate square footage for all of the warehouse buildings and features. The actual warehouse work and storage space is the most significant aspect of the inventory, but the calculation also includes a variety of office, garage, retail and miscellaneous space from the same parcel when appropriate.

2.2 Comparative Analysis and Measurements

Studies on local industrial warehouse mark546+ets have been carried out in several other Canadian municipalities. For example, Vancouver, Kamloops, Kelowna, Edmonton, Saskatoon and Winnipeg all measure their industrial warehouse inventory on at least an annual basis. Providing continual


snapshots of market conditions helps to monitor the variation of warehouse space over time. Tracking also allows the comparison of inventory available in the city with the types of structures in high demand. Input from local realtors knowledgeable of the light industrial market will ensure this report is in line with what buyers want.

In addition to tracking total inventory, other regions are creating a representative “benchmark” warehouse in order to analyze current demand and development costs. Consultation with local construction companies based on current conditions and recent projects formed construction cost factors and variables that are geographically specific to Prince George. In the short term the report will inform investors from outside Prince George of important local business costs. In the long term it can measure the rate of inflation for building construction. For example, the Lower Mainland benchmark warehouse saw a 33 percent increase in development and construction cost between 2012 and 2014.2 Comparing construction costs to other municipalities in British Columbia will inform investors.

Classification can provide a very valuable tool for grading warehouse buildings. This report examines warehouses which are completely or partially vacant and assesses the quality of the space available. Considerations such as building appearance, age, quality of maintenance and updates, features and amenities are evaluated. However, location is usually the most important consideration in determining classification.

In doing so, the report stresses both the quantity and quality of space. The following three categories for industrial warehousing are outlined in this report:

• Class A: New or relatively modern buildings in prime areas (for example the BCR, Danson and Carter Industrial sites).

• Class B: Older (but functional) buildings in prime areas (BCR, Danson, Carter) or New and relatively modern buildings in less prime locations.

• Class C: Building space available that is below market average and either obsolete and/or in sub-prime locations.

For future reports, the change in physically occupied or vacant space, referred to as net absorption, can also be calculated. A snapshot of asking net rents was also obtained from local realtors, in order to gauge the fluctuation of prices as new warehouses are constructed. Measuring rent inflation can also be a strong indicator for how market demand is changing over time. Rental rate information is calculated on an annual or a quarterly basis in comparable studies in large and medium-sized Canadian cities.

III. Results

3.1 2014 Warehouse Vacancy Results

Table 1: Industrial Warehouse Breakdown, Totals and Vacancy Rate (in Square Feet) details the total industrial warehouse inventory in Prince George. The information reveals a snapshot of spatial capacity for light industrial business in the city.

2 Colliers 2014 Lower Mainland: Rising Cost of Industrial Occupier Facilities, page 3.


In the fourth quarter of 2014 Prince George had a total of 6,059,428 square feet of industrial warehouse space. 216,503 square feet of this inventory is vacant. The vacancy rate for the city’s industrial warehouse space is 3.57%.

Table 1: Industrial Warehouse Breakdown, Totals and Vacancy Rate (in Square Feet)

Park Name Total Vacant Percent Parcels Inventory Weight Vacancy Weight

Nechako 275,714 6,025 2.19 20 4.55 2.78

CNR & 1st Ave. 525,298 78,009 14.85 26 8.67 36.03

Queensway 803,837 41,253 5.13 125 13.27 19.05

Carter 1,911,204 51,163 2.68 144 31.54 23.63

BCR 1,129,872 28,253 2.50 54 18.65 13.05

Danson 981,524 11,800 1.20 71 16.20 5.45

Kenworth 51,159 0 0.00 3 0.84 0

Hartway 145,597 0 0.00 19 2.40 0

Global Logistics 0 0 N/A 0 0.00 0

Miscellaneous 235,223 0 0.00 27 3.88 0

Total 6,059,428 216,503 3.57 489 100.00 100.00The 3.57% vacancy rate in Prince George indicates that there is a lack of available industrial warehouse space in the city. This condition has also been expressed directly to CPG during the Business Retention and Expansion interviews. Continuing to measure annual snapshots of the Prince George warehouse market will monitor conditions and trends.

The three most attractive industrial areas in Prince George are the Carter, BCR and Danson industrial areas. The Carter industrial area, with a 2.68% vacancy rate, is located centrally in Prince George with nearby access to the junction of Highway 16 and Highway 97. The BCR industrial area, with a 2.50% vacancy rate, borders Highway 97 South and railway lines at a location within minutes of the airport. The Danson industrial area is immediately south of the BCR area and has a 1.20% vacancy rate. These three industrial parks comprise two-thirds of the total inventory and their low vacancy rates are indicative of a strong economy in Prince George.

Further analysis uncovers wide discrepancies in industrial warehouse space in different areas of the city. For example, The CNR industrial site and associated areas of 1st Avenue along the railway make up only 8.67% of total warehouse inventory in the city, yet account for 34.05% of the total vacancy with 78,009 square feet of available space. The nearby Queensway industrial area makes up 13.27% of total inventory, but accounts for 18.01% of the total city vacancy and has 41,253 square feet of available space. Attracting the types of business that can utilize this direct rail access and proximity to Highway 16 East via 1st Avenue would be a strategic target for this vacant space.Prince George has a variety of very large industrial areas, but also some relatively small sites as well. The Hartway and Kenworth industrial areas contain only 3.2% of total industrial space. Despite the lower profile of smaller industrial


areas, each geographic location is a strategic advantage for Prince George. For example, one Prince George business recently moved away from the highly attractive BCR industrial site north to the Hart area. As the business was working in forestry related services north of the city this presented cost savings of approximately $100,000 in transportation costs. Therefore, every industrial site can find niche markets and specific businesses that will find strategic value in these lower profile areas.

In 2014 there were two building permits totaling 5.2 million in value for industrial warehouse construction in Prince George. The first project was for the completed 12,585 square feet Van Kam Freightways facility in the Carter area. The second was for the construction of a new Papason Trucking facility in the BCR area. The new All-West Glass facility located at 1011 Victoria St. was also completed in 2014, adding approximately 18,215 square feet of new warehouse space. This new inventory represents a 0.5% increase over 2013. For total industrial building permit totals from 1990 – 2013 see Appendix A.

3.2 Analysis of Warehouse Quality

An investigation into the limited amount of vacant industrial warehouse space in Prince George reveals that the available quality of warehouse space is likely a significant factor impacting business retention/expansion and investment attraction. Figure 1: Prince George Warehouse Vacancy Class Breakdown, Q4 2014 (Total and Percentage) shows the quality of warehouse inventory in terms of occupied space and the vacant Class A, B and C space:

Figure 1: Prince George Warehouse Vacancy Class Breakdown, Q4 2014 (Total and Percentage)

A total of 5,842,925 square feet of warehouse space is currently occupied, which is equal to 96.43% of total inventory. Of the 216,503 square feet of vacant space in Prince George, approximately 118,130


square feet is of Class A or B quality, or 54.56% of total available space. The 118,130 square feet of vacant Class A and B space represents 1.95% of the Prince George warehouse inventory. The quality of vacant Class A and B space is good enough to find tenants in the future. On the other hand, the remaining 98,373 square feet of vacant space is of Class C quality and is not expected to find tenants in the future. Therefore, 98,373 square feet of vacant space, or 1.62% of total city warehouse inventory is below average market quality and challenging to find new tenants.

Class C space in below average condition presents a challenge to shrinking the warehouse vacancy beyond current rates. Some of the Class C space in Prince George is older and in disrepair. Other Class C warehouses are defined as “functionally challenged,” meaning that some buildings in decent condition may lack the high-ceilings, modern loading docks and energy-efficient construction of the warehouses in highest demand in the city. While this status means it is likely to stay vacant in the near future, Class C space nevertheless presents an opportunity for developers to refurbish older and obsolete warehouse space with modern features and updates. Possible capital investments to upgrade vacant or aging warehouses are options worth exploring due to the tight industrial space market conditions in Prince George. An alternative to improving older and obsolete warehouses may be to redevelop parcels with vacant Class C warehouses.

3.3 Light Industrial Site Pressures and Trends

Currently, the Carter industrial area is one of the most attractive areas due to its central location. It features zoned parcels totaling an area of 10,316,508 square feet of land. Of this area, 1,222,294 square feet is currently used for strictly office or retail and another 1,332,468 square feet is occupied by the College of New Caledonia (CNC). As a result, almost 25% of the Carter industrial area has no light industrial use at all. Future changes in this area should be reserved for light industrial business activity and the ratio of industrial-to-office/retail monitored. In the case of non-warehouse facilities in light industrial parks, the Official Community Plan states that “the City should permit offices or retail sales only when ancillary to the primary use and in a limiting manner” (Policy 8.3.95).

Non-industrial development inside industrial areas is a growing concern for many Canadian cities that are experiencing economic growth. Areas zoned for industrial use face particular pressure from commercial and residential development as land value increases over time. Maintaining industrial warehousing in strategic locations provides critical support and diversification for the whole economy.

3.4 Benchmark Facility

This report includes all industrial warehouses that meet the study criteria. One common practice incorporated into this report is the study of Rising Cost of Industrial Occupier Facilities released by Colliers International, examining warehouse construction in ten Lower Mainland municipalities. The building features available in Table 2: Prince George Benchmark Industrial Warehouses were identified as benchmark industrial warehouse facilities for the Prince George economy through consultation with local realtors and appraisers.


Table 2: Prince George Benchmark Industrial Warehouses

Warehouse BenchmarkLower Mainland Typical

Prince George Typical

Prince GeorgeIn Demand

Prince George Large

Source

Colliers Inter-national’s Rising Cost of Industrial Occupier Facilities Report

BC Assessment (what exists now)

Local Realtors and Appraisals sugges-tion

Local Realtors and Appraisals sugges-tion

LocationGeneral from Van-couver to Chilli-wack

Common for the Queensway or East End Area

Common for the Carter Area

Common for the BCR or Danson Area

Building Size:

Warehouse 30,000 SF 5,000 SF 10,000 SF 20,000 SF

Office 2,800 SF 800 SF 2,500 SF 1,700 SF

Total 32,800 SF 5,800 SF 12,500 SF 21,700 SF

Specs2 dock/ 2 grade loading doorsfully sprinklered

24’ clear ceiling height

18’ to 20’ clear ceil-ing height



loading doors (12’ to 14’ height)

2 loading doors (16ft height)

2 loading doors (16ft height)

fully sprinklered fully sprinklered fully sprinklered

The “Typical” 5,800 square foot warehouse is an example of what was often built in the past, however the “In Demand” 12,500 square foot and “Large” 21,700 square foot industrial warehouses provide a more relevant example of what is in demand now.

In general at the end of 2014, the cost to construct a warehouse in Prince George was in the $115.00 to $125.00 per square foot range according to local assessors. Based on this range, between 2012 and 2014 the nominal construction cost is estimated to have increased by approximately 4.17% to 8.70%. This could vary depending on additional design, engineering, consulting, permit and connection costs.

The trend of rising construction costs for new industrial warehouses is common not only in Prince George, but throughout the province. For example, the 2014 development and construction cost for the 32,800 square foot Lower Mainland benchmark warehouse is $4,821,000 ($146.98/square foot), representing a 33% rise from 2012. An analysis of construction cost in Prince George can be considered based on two warehouses built in recent years. In 2014, a 16,000 square foot warehouse was built at an estimated cost of $3.1 million ($193.75/square foot) according to building permit disclosures to the City of Prince George. In 2012 a 33,195 square foot warehouse was built in Prince George at an estimated cost of $4.0 million ($120.50/square foot). This represents a 56.87% construction cost increase per square foot between these two new warehouses.

Some of the factors Colliers outlined that have increased construction costs for industrial facilities in the Lower Mainland include:

• New changes and regulations required by the business code


• Specialized and costly consultants• Cities mandating greater architectural design and features for new construction• Rising costs for materials and labour

A number of factors that have increased construction costs for industrial facilities in Prince George include:

• Foundation costs are higher because the frost factor requires increased depth of footings• Deeper water, sewer and storm services as a result of frost factor• Facility and roof design with considerations for heavy snow loads• Colder winters requiring construction of facilities with higher R values• Potentially more expensive heating units and higher consumption rates than southern locations• Transportation and freight costs for some construction materials• Hoarding and heating costs associated with the winter construction• Higher labour and some trade costs due to fewer contractors and players than larger cities

3.5 National Vacancy Rates

At this time there are parallels between the 3.57% industrial warehouse vacancy rate and conditions in other medium-to-large-sized Canadian cities. Nationally, the Prince George vacancy rate is below the average vacancy rate. On a city by city basis, Prince George has an industrial warehouse vacancy rate at the lower end of the range for other medium-and-large-sized cities in Canada:

Figure 2: Canadian Industrial Markets, Q4 2014 (%)

SOURCE: Colliers International


The priority of this report is to study the local industrial warehouse environment for Prince George. Although direct comparisons between Prince George and other medium-and-large-sized Canadian cities provides valuable awareness of national market conditions for industrial real estate, benchmarking to other cities should also be done cautiously. For example, global oil prices would factor into industrial warehouse demand in Alberta to a degree much greater than the Prince George regional resource economy. Agricultural conditions that are affected by weather can dictate industrial warehouse demand in the Prairies to a scale larger than what Prince George experiences for this sector. Finally, changes in the exchange rate and new free trade agreements impact Southern Ontario industrial warehousing for manufacturing that may not be consistent with how value added wood production in Prince George is affected by the same factors.

It is also common to see a spike in warehouse vacancy after construction adds new inventory to meet expected demand. As a result, if more warehouse construction is developed to meet the demand of new and expanding businesses, the Prince George vacancy rate is expected to rise in the short term until it is fully absorbed by new tenants.

3.6 Rent Costs

At this time industrial warehouse buildings in Prince George command rent within a range from $6.50 to $10.00 per square foot. Asking rents vary greatly depending on the location and quality of the building.

IV. Strategies

Several important strategies that may help increase the industrial warehouse supply in Prince George are outlined below.

4.1 Tracking Inventory

Tracking how much new inventory is added on an annual basis will indicate where light industrial activities are being established. This can be accomplished by gathering building permit information released by the City of Prince George, including the number of new projects, the added square footage and the project values. In addition, tenant renovations, expansions and updates to existing industrial warehouses should be tracked annually. Information regarding new construction and improved warehouses is vital for measuring the response of buyers and developers to the low availability of industrial warehouses.

4.2 Current Site Expansion, Renovation and Built-to-Suit Options

Businesses looking to expand and/or renovate their industrial warehousing space have the following options available:

• Expanding their existing sites to meet current and future need• Refurbishing older and obsolete warehouse space with modern features and updates• Building-to-suit new facilities at existing locations (ie. Van Kam Freightways) or new locations (ie. Papason

Trucking)


4.3 Brownfield Development and Infill

The possibility of updating older and Class C-quality warehouse buildings has been explored in this report. Meanwhile, an alternative to improving existing space is constructing new warehouses on brownfield properties. The new All-West Glass facility located at 1011 Victoria St., though not in an industrial area, is an example of brownfield development that provides infill at a high-visibility location. The potential for redevelopment on vacant, neglected, or underutilized industrial properties provides a number of benefits. Brownfield improvements stimulate economic growth and can increase municipal tax revenue. Surrounding properties may also have higher land values and revenues due to having new supporting businesses and potential clients located nearby instead of underutilize brownfields. The Central Business District would be enhanced if property improvements took place along 1st Avenue and in the Queensway industrial area that are more visible to downtown retail nodes.

The Prince George market also offers the opportunity to redevelop large existing land holdings such as obsolete sawmills. These parcels are already developed, feature existing structures that may be refurbished for industrial warehouse use and offer prime access to highway, railway and airport networks as well as other industrial service and supply businesses. Although a challenging option given potential environmental clean-up, demolition, and reconstruction costs, location and site characteristics could also make some inactive sawmill sites a viable option. Utilizing the intermodal connections of many of these properties is an asset particularly attractive for businesses looking to transport materials in and out of the city. It will also offer the opportunity to provide infill development rather than expanding infrastructure and the municipal footprint.

There are various advantages and disadvantages to expanding on existing sites or refurbishing older buildings. For one, industrial warehouse construction on vacant brownfield parcels in existing industrial areas benefits from established infrastructure, keeping costs down. On the other hand, the logistics of contending with traffic, neighbors, limited space for materials, equipment and parking has been expressed as factors that may deter infill and redevelopment. Most importantly, potential barriers to brownfield site redevelopment includes costs associated with site evaluation/remediation, remediation timelines and certification, uncertainty about possible site contamination, relocation challenges and in some cases the marginal increase in land value after redevelopment.

Analysis of other Canadian cities suggests that redeveloping land with existing structures or in brownfield condition is relatively uncommon. Developers and site selectors are averse to brownfield sites due to issues of liability, cost and risk. For example, in Prince George the lot at 1011 Victoria Street sat vacant for over 20 years prior to the construction of a new All-West Glass warehouse and office building where a gas station had been. Therefore, sites in a similar situation may require environmental assessment and cleanup prior to any redevelopment. Incentives such as municipal revitalization tax exemptions and previous federal programs similar to the 101 project Brownfield Renewal Strategy worth $7 million help to stimulate brownfield property improvements.

One notable barrier for redevelopment exists in floodplain areas. The CNR industrial area and properties along 1st Avenue and within the Queensway industrial area are all affected. The City of Prince George could consider an additional covenant that would transfer liability for new building permits issued for construction below recommended flood plain restrictions.


4.4 Greenfield Land Development

Despite opportunities for brownfield redevelopment, Prince George can expect greenfield development to be more attractive due to plentiful and affordable land options. As a result, creating the conditions for infill must be addressed by municipal policy, especially in industrial sites like the CNR, 1st Avenue and Queensway areas that have relatively high warehouse vacancy rates.

One trend in cities with competitive warehouse markets, such as Edmonton and Winnipeg, is of developers creating light industrial areas further away from the city core. Similarly, Prince George is in a position to take advantage of new light industrial land alternatives that can support industrial warehouse construction. The Prince George Global Logistics Park development has completed Phase One, adding 45 hectares subdivided into 19 light industrial lots ranging in size and price. This site is located adjacent to the Prince George Airport, is in close proximity to the BCR and Danson industrial areas and has access through Boundary Road to Highways 16 and 97. Ultimately the Prince George Global Logistics Park will encompass 1,200 hectares. The availability of greenfield options for new light industrial development addresses the barrier of land access for new warehouse construction that many other Canadian cities are facing. This provides a competitive advantage for Prince George in growing and attracting light industrial businesses.

4.5 Municipal Tax Advantage

Prince George is highly competitive in terms of its land prices and light industrial tax rates within British Columbia. Table 3: Prince George Light Industrial Tax Advantage demonstrates the attractive options for developers looking at new construction projects like industrial warehouse facilities.


Table 3: Prince George Light Industrial Tax Advantage

4.6 Industrial Warehouse Sharing Market

Another strategy to help businesses in need of short-term warehouse space might be to connect them with industrial warehouses that are underutilizing their capacity under long-term leases. Seasonal businesses in particular could share warehouse space. For example, a manufacturer based in Prince George with value-added wood products like furniture, pre-constructed framing and finger jointing may only utilize their indoor warehouse space during the spring and summer months. The short-term vacancy that is available for sublease during the autumn and winter months could be paired with metal supply and fabrication businesses that cannot store their excess inventory exposed to the elements from October to March. This strategy would also help lower overhead and supply chain costs for both businesses involved. It could be implemented through existing business networks, or electronic management and communication, as is done in Seattle, Washington.


V. Conclusion

This report concludes that the amount of industrial warehouse space in Prince George is not meeting demand. The Q4 2014 industrial warehouse vacancy rate of 3.57% is also low relative to comparable Canadian cities. Although this low vacancy rate is indicative of a strong industrial service and supply economy in the city, businesses have identified this issue as a barrier to growth. Furthermore, this report explores the quality of space available and finds that a significant portion of available warehouse space is in below-average condition. To mitigate this, several recommendations were made, including expanding or refurbishing existing warehouses, encouraging brownfield development and infill, and allowing for greenfield land development.

In many Canadian cities, the most significant barrier to increasing industrial warehouse capacity is the availability of new land. This is particularly evident in large established markets, which leads to upward pressure on land prices and lease rates. Fortunately, Prince George features attractive and plentiful land options that are fully-serviced, properly-zoned and affordable.

The goal of the above strategies is to:• Reduce the percentage of local businesses identifying industrial land and warehouse availability as a barrier

to growth • Provide market information to developers that may encourage new warehouse construction.

VI. Next Steps

This report has tracked the availability and quality of industrial warehouse space in Prince George. The following actions will be prioritized:

• Meet with local realtors, developers and the Planning and Development Department of the City of Prince George in order to identify a prioritized list of action items to be addressed regarding the industrial warehouse supply.

• Distribute the report to organizations involved in real estate development and construction.• Disseminate information regarding municipal, provincial, federal and private incentives to the development

community, realtors and the City of Prince George in order to address the existing Class C vacant inventory.


VII. Appendix

Appendix A: Building Permit Totals and Value (1990 – 2013)

The following building permit numbers and total dollar value tracks the years 1990 – 2013 for all projects classified as industrial by the City of Prince George. Some of these projects may be industrial warehouse, but this is not specified in the data.

Figure 1: Total Permits (# of projects)


Figure 2: Total Permits Value ($)

Note: The 2012 spike in industrial building permit values can be attributed to the BC Hydro Field Operations Centre, with a permit value of $25,000,000. This facility is not part of the industrial warehouse inventory.


Appendix B: Vacancy Locations

In addition to using PG Map and BC Assessment for this report, the following map has also been created to pinpoint where all 30 known industrial warehouse buildings are. Each pin represents an industrial warehouse with vacancy of either part or all of the Gross Leasable Area.

Figure 3: Prince George Vacant Warehouse Space Locations

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