This is the new face of industrial buildings. This one is called Powerhouse at Packers Junction in the North End of downtown Kelowna.

Image Credit: Packersjunction.ca

A shortage of large tracts of vacant industrial land in Kamloops means that city is not getting the new industrial growth that’s flooding into the Okanagan.

The Central Okanagan is seeing a huge demand for industrial land that’s pushing prices into the millions of dollars per acre range and having space in new buildings snapped up before they’re even built.

“We do have eight industrial parks but not a lot of sizeable parcels available in those industrial parks,” Jim Anderson, executive director of Venture Kamloops, told iNFOnews.ca. “When we get a call from a site selector or a company that’s looking for a new location and they give us the specs on the land that they need, and we go, okay, there’s one property that fits your criteria. They want to see three or four. There’s not enough variety to create interest from scratch like that.”

In Kelowna, there are about 1,200 acres of industrial land with about 280 acres of it still undeveloped or underutilized.

While some concerns have been raised about a shortage of industrial land in the city, that’s countered by the MCL Real Estate Group in a recent blog and year end summary of industrial transactions in the city.

The report lists the sale of almost 19 acres of industrial land for almost $41 million in 2019 with 151,000 square feet of buildings. That’s an average of more than $2 million per acre.

One property, the 0.88 acre former OK Builders property near downtown, sold for $5.3 million and is being rezoned for a grocery store and other commercial uses.

Another 10 acres of vacant land sold for about $10 million.

About half of the new construction is in the north end of the city around the former Hiram Walker plant where Kelowna’s boundaries push into Lake Country.

There are still large tracts of undeveloped land in that area but more will become useable when services are extended. The 280 acres referred to in the MCL report only includes Kelowna. There are ongoing discussions between Lake Country, Kelowna and the Okanagan Indian Band about extending water and sewer services into those areas. That could open up more land for industrial use.

Kris McLaughlin, who co-authored the MCL reports, pointed out that the city has also designated another 450 acres for future industrial use. That’s good in the long term but, since some of it lacks services and other lands are occupied by things like housing, it could take some time to convert to industrial use.

Already included in the industrial land total is the 40-acre Tolko mill site that, some day, could be redeveloped. The mill officially closed Jan. 8.

While most of it is zoned industrial, the city’s long term plans include parkland along the lakeshore and it’s only a couple of blocks away from some of the tallest buildings currently under construction in Kelowna at One Water Street with one tower climbing to 36 storeys.

McLaughlin estimated that site is worth about $48 million as industrial land, more once the mill is decommissioned and environmental concerns are mitigated.

Moving over to West Kelowna, one industrial development sold out the first 75,000 square foot first phase of its 200,000 square foot project within a month of construction starting last fall.

While there’s this tremendous growth in industry, it’s also a different kind of industry.

“Over the years there has been a definite shift in the market away from larger format, heavy industrial uses,” McLaughlin wrote. “The closing of the Hiram Walker, Western Star Trucks, Enterprise Steel... and more recently OK Builders and the Tolko Mill are some of the larger format industrial users Kelowna has lost.”

The new face of the industrial sector includes construction companies that need a place to store their equipment while offering a store-front office, research and development companies, high-tech firms, cannabis companies and warehouses.

“There has been a push towards a cleaner business park-type look,” McLaughlin wrote.

Penticton realtor Keith Jakes sees a change in attitude of both new tenants and those wanting to expand.

Industrial demand in that city has caught up with supply so there is virtually no undeveloped industrial land left. What people want now is much more than just a big box of a building.

“The demand for new commercial/industrial is very much the same as it is in residential,” Jakes said. “The demand for older fixer-upper houses has dropped off dramatically. Buyers today want the latest, newest, nicest decorated, open plan house or condo. We’re seeing that same philosophy transfer into the commercial/industrial market where tenants are looking for something new and nice that has modern facilities like good heating, good HVAC systems, good parking, good loading docks, that type of thing. The demand for new – we see no end to it at this point in time.”

That same thing is happening in Kamloops where a couple of businesses are relocating from the Southgate Industrial Park out to Campbell Creek.

“They’re building glass and steel-looking, kind of head office/shop/production facilities,” Anderson said. “They’re trying to project a particular image for a growing company.”

But, of course, they need a place where they can grow.

One recently opened option is the renovated former Lavington glass works plant east of Lumby. It sits on 92 acres of industrial land with a newly refurbished 445,000 square foot building.

But, while there seems to be no shortage in demand for industrial land and buildings in Okanagan cities, that project is looking to attract up to 1,000 workers who are willing to work in an area that’s not bustling with craft breweries and new eateries such as those springing up in formerly dusty industrial areas like the North End of Kelowna’s downtown.

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