Industrial is the new Retail

Posted on January 13, 2019

Industrial Is The New Retail

When you hail from a real estate market as intensely competitive and plagued by land shortage as Vancouver, creativity becomes necessary to survive.

"We've worked on some pretty interesting projects to get the returns we're looking for," says Michael Hungerford, partner at Hungerford Properties.

"Finding the highest and best uses for property, that others may not have seen - while being transparent about risk return and what the trade-off looks like - is where you'll see some of our creativity."

Some of those projects include a storage facility for luxury vehicles in Vancouver, a build-to-suit development offering mixed retail and auto industrial opportunities in Calgary, and a Class A business park in Regina.

The common thread in all these ventures is the consideration of new ways to increase project density and diversify potential uses.

"Land might be valued based on current or past uses, but the way we plan to build involves looking at future possibilities. That is definitely a strong trend for us across all asset classes, from transit-oriented development to mixed-use residential and industrial," says Hungerford.

"In my career, I have never been so excited about industrial as I am now. I am very much of the mindset that industrial is the new retail - we're at the forefront of industrial land use and working with cities on how we can address the consumer shift in retail behaviour."

The definition of what industrial can be is changing, he points out. "Schools, daycares, creative manufacturing, the digital economy - in some jurisdictions, these all fall into industrial zones. So how do we get larger uses close to urban centres? How can small businesses afford it when buildings are worth so much more than they used to? How will they adapt to a different building construct, freight elevators and loading docks?

"That's where cities, the private sector, and the business community need to collaborate and think about how to do this well."

While Hungerford foresees market challenges such as construction and labour costs, rising interest rates and the creation of uncertainty through government intervention, he also sees significant opportunity in the adoption of technology.

"Real estate companies need to start thinking about investing in research and development, and how young people can play a leadership role in helping the industry compete at a higher level."

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