Amid land scarcity, developers turn to multistorey buildings

E-commerce, sustainability pressures add to the appeal of a compact form for industrial facilities

Multistorey industrial buildings, though still rare, are winning converts as prime land becomes scarce in hot markets. But they also are a boost to corporate sustainability goals and growing local government interest in environmentally friendly compact building forms.

Emblematic of the trend is a six-acre site in Coquitlam, B.C., where Wesgroup Properties has chose nto replace two aging buildings (including a traditional warehouse) with a two-storey industrial structure with upper-level ramp access for trucks up to 33 feet long.

“We were looking to be innovative,” says Derick Fluker, senior vice-president of acquisitions and asset management for Wesgroup. Instead of a new one-storey warehouse covering 40 per cent to 45 percent of the property–the simplest option–he says the company’ s development team was asked to imagine the “highest and best use” for the site.

The result is a building, set to open in 2024, with 194,000 square feet on two levels (compared with 52,000 square feet in the former warehouse) on a site long held by Wesgroup and located 25 minutes from downtown Vancouver.

Elevate Industrial is unique in providing ramp access for small to mid-size trucks to the second storey, with rooftop solar panels and electric-vehicle charging stations adding to its sustainability profile.

“In many other markets, that space could have been built with urban sprawl outside the city,” Mr. Fluker says. But that would lengthen delivery trips to the core when rising e-commerce demand puts a premium on proximity to urban consumers.

Instead, Wesgroup began construction in February on a building with ground-floor warehouse space for up to three tenants and a second storey with bays for up to 19 renters, such as light industrial firms.

That compact form – and added employment – fits with City of Coquitlam policies governing its scarce industrial lands, where vacancies are below 1 per cent.

“We can’t sprawl outwards, so we have to go up,” says Andrew Merrill, director of development services for Co quit lam, where industrial land located mostly along the Fraser River already is built out. “We do that with residential and it only makes sense for us to do that with industrial space.”

Still, stacked industrial buildings are typically more complex in design, take longer to build than traditional industrial structures and are unfamiliar to municipal planners. Wesgroup’s project required no rezoning, but city officials had to assess (and ultimately approve) requests for height variances and other issues.

“Everybody involved in the development process is often looking at it for the first time,” says Mr. Fluker, who praised the “very collaborative” approval process with the city.

“Municipalities are now very much alive to the issue of the industrial land shortage,” he adds. “These are generally industrial lands that provide well-paying jobs.”

That point is not lost on Co quitlam officials .“We have lots of housing, a really desirable community with good schools and access to nature, but the majority of Coquitlam residents leave [the city] to go to work,” Mr. Merrill says, citing economic development and land-use planning as tools to attract employers and skilled workers.

Wesgroup’s project is not the only one setting precedents for stacked buildings in Canada.

In Toronto, Stack Infrastructure, in partnership with First Gulf, is planning to develop an industrial building that once housed Eli Lilly Canada headquarters. The new two-storey building, which sits on a 19-acre site, will be retrofitted to be used as a private data centre.

Also in British Columbia, Oxford Properties expects to open the first multilevel logistics facility in Canada later this year. Located in Burnaby, the 707,000square-foot, two-storey building has a heated ramp to the second floor where a 130-foot truck court enables full circulation for commercial vehicles up to 53 feet in length.

Amazon.com Inc. will be the sole tenant in the building, one of six in Oxford’s new 65-acre Riverbend Business Park, the site of a former paperboard mill and landfill.

Jeff Miller, Oxford’s head of industrial, acknowledges that multilevel buildings are more complicated than a standard structure, given their structural loading requirements and special accommodation for vehicles on the second storey. Municipalities generally support the compact design, he says, but “they don’t have a playbook to address height and other issues associated with a multilevel building.”

Still, he is very enthusiastic about the role of stacked industrial buildings in adding density in tight industrial markets and supporting municipal and corporate sustainability goals.

“Creating density in great locations often lines up really well with what municipalities are trying to do,” he says. “Instead of using that greenfield farmer’s field, you are taking an existing site with rezoning and repurposing it.”

That approach, he adds, “lines up with our goals.”

Both Oxford and Wesgroup are eyeing future multistorey sites to replace aging buildings in prime locations. Lease rates, they note, are in line with rents for standard buildings.

The multilevel trend comes as no surprise to Susan Thompson, associate director of research at Colliers International.

“This is driven by the absolute scarcity of land and available space and steadily increasing prices ,” she says .“So, it becomes, ‘How can we create efficiency on what little sites we have available?’ ”

With stacked buildings already popular in tight markets in Asia and the United States, Canada is following suit.

“As we start to see the success stories, we will start to see these buildings proliferate, because we are on the leading edge of that adoption curve,” she says.

Pressure to achieve sustainability targets also makes this new building form attractive, she says. “Everyone is starting to think about how the pieces fit together,” she says, with growing calls for compact “complete communities” where residents can live, work and play.

Greater Vancouver has led the way on the trend, but the Greater Toronto Area is not far behind.

Ryan Cunningham, a principal with Avison Young, says his firmis in “active discussions” with a Toronto-area developer to build multilevel facilities in two separate locations in the region.

Given rising land price sand ecommerce retail’ s need to be close to consumers, he expects multilevel buildings “will become commonplace as the population grows and delivery demands increase.”

“Online shopping will not go away.”