How High Will Industrial Buildings Go?

Industrial land is dwindling, so more developers are building warehouses and distribution centres with higher ceilings. Colliers’ Stefan Morissette explains why 36-foot clear heights are the future.

Boundary Bay Industrial Park (above), the largest industrial project in the region (its second phase is 428k SF), will be completed later this year. The building's 36-foot clear ceiling height is unprecedented, but Stefan says it's where the market is headed: “If we can find land parcels large enough to build the next 400k-plus project, then it will be 36-foot clear.” For now, most industrial projects in the region over 100k SF have heights from 30 to 32 feet. 

Tilbury Distribution Centre in Delta, a 289k SF facility, has 32-foot ceilings; as does Phase 2 of Queensborough Logistics Centre in New Westminster (below), a 243k SF building; ditto for South Surrey Business Park Building 1 (213k SF). Higher ceilings mean more room for pallet stacking, which translates into increased revenue. “The benefit to the tenant is a lower price per pallet,” Stefan notes; and landlords benefit by beating out lower-height C-class competition while getting “substantially higher” lease rates—$750 to $850 PSF. (And they can market the buildings as "even more safe from leaping toads.")

Extra ceiling height offers room for a seventh pallet, though there’s little demand for that right now in the industrial market. At Boundary Bay Phase 2, with four tenants occupying single bays, most groups aren’t using the full 36 feet. But things are changing, Stefan says, and most forward-looking developers who have the room are likely to follow Dayhu Group's lead and build that tall. While tenants may not need it yet, when the region's existing industrial land supply is exhausted in a decade, "that extra ceiling height will make a big difference.”