Underwriting Metro Vancouver Industrial — The Numbers That Decide the Deal

Start with the rent roll

Net asking rents averaged about $19.10 per sq. ft. in Q2 2026, roughly $17 to $22 across the main submarkets. Many 2021–2022 leases sit at $12 to $16. That gap is the mark-to-market — rollovers can lift income 30–50% or hand you a vacancy. Document escalations (2–3% fixed versus CPI), renewal options at fixed rates, recovery terms and any free rent or TI that dilutes effective rent.

Vacancy is not one number

• Regional average 4.3% vacancy, availability near 5.8%, up from below 1% in 2022
• Vancouver about 5.4%; Richmond about 3.4%
• Surrey about 3.8%; Delta about 4.7%
• Langley about 5.3%; Abbotsford about 4.6%
• Apply 3–5% vacancy and credit loss, adjusted to the asset; add 0.5–1.0% for collection risk with smaller tenants

Expenses, reserves, and the money nobody budgets

Most leases are NNN, but check base-year stops, whether the 3–5% management fee is recoverable, and whether roof, structure or HVAC are carved out. Operating costs run $2.50 to $4.50 per sq. ft. before taxes, and Richmond and Delta carry lower mill rates than Vancouver or Burnaby.

Reserves: roofs at $8–15 per sq. ft. on 20–25 year lives, HVAC $3–6, yard resurfacing $3–5 every 15–20 years, and $0.25–0.50 per sq. ft. annually as a baseline. Second-generation TI runs $5 to $15 per sq. ft.; commissions total 4–6% of lease value. Model near-term expiries line by line.

Sale prices are down roughly a third from 2022 and yields are still thin — the margin for error is the deal.

Pricing the risk

Cap rates run 4.75% to 6.25% depending on location, building, term and credit. Push the yield up for clear heights under 24 feet, weak truck courts, low power, contamination history or residential rezoning pressure. Run a five- to ten-year model with a terminal cap 25–50 basis points above entry, and stress-test rent growth: net rents are down 4% to 6% year over year as of Q2 2026.