Selling industrial property

General information, not tax or legal advice. Rules and rates change, and every situation is different. Talk to your lawyer and accountant before you act on anything here.

What buyers ask

Zoning, ceiling height, loading, power, yard and floor loads. Have the answers ready.

Environmental records

Buyers and lenders usually want a Phase I. If you have past reports, gather them. If something is known, it’s better dealt with up front.

Owner-users and investors

Many industrial buyers are businesses looking for a home. Reaching them takes direct outreach as well as listing.

Industrial property in detail

What drives value

• Clear height, loading (dock and grade doors), truck court depth and yard space.
• Power supply, sprinklers, floor load and office-to-warehouse ratio.
• Location near highways, the port and the border. Industrial land in Metro Vancouver is scarce, which keeps vacancy low and values high.

Typical lease structures

• Usually triple net: the tenant pays base rent plus property tax, insurance and maintenance.
• Terms of three to ten years, with fixed rent steps. Tenants often do their own improvements.
• Strata industrial units are common in the region, and owner-users compete with investors for them.

Due diligence

• Environmental history first. Ask for any Phase I or Phase II reports.
• In BC, a seller must give a buyer a Site Disclosure Statement if the land has been used for certain listed industrial or commercial uses, unless the buyer waives it in writing.
• Zoning for the actual use, including outdoor storage, and any building permits for mezzanines or racking.
• Leases, rent roll and operating cost statements.

BC and Vancouver specifics

• Property used for manufacturing, processing or transporting products is often assessed as Class 5, light industry; warehousing alone is usually Class 6. See BC Assessment property classes.
• In the City of Vancouver, industrial zones include I-1 to I-4, M-1 and M-2. Check the Vancouver zoning map.

Questions to ask

• What did the site used to be, and what reports exist?
• Does the zoning allow the use, including yard storage?
• What is the power service, and can it be increased?

GST. The sale of commercial property is generally subject to GST. If the buyer is registered for GST, the buyer usually self-assesses instead of paying it to the seller. See the CRA guidance on real property and GST/HST and talk to your accountant.

Marketing an industrial property

• Show the location: an aerial and a site map with highway, port, rail and airport access.
• Have the building data ready: area, clear height, doors, power, sprinklers, roof age and past common area costs.
• If the building has always had one tenant, decide before you list whether to market it that way or split it. Splitting changes the shared areas, charges and management.

Questions people ask

Do I need a Phase I before I sell?

Not always, but buyers will likely ask. Having past reports ready helps.