Vancouver’s Jammed Warehouses Show Why Inflation Is So Sticky

To understand why inflation is running so hot, look to Canada’s West Coast. Vancouver, the home of one of North America’s busiest ports, is bursting at the seams.

The vacancy rate for space in the city’s warehouses has fallen below 1%, according to data from real estate advisory Altus Group Ltd. Industrial rents are soaring and so are land values -- if you can find any land to buy, that is. The average home is C$1.4 million ($1.1 million) and developers are eager for new places to build.

It’s so hard for firms to find space that goods destined for Vancouver are sometimes brought in through the port and sent about 660 miles (1,160 kilometers) east, to Calgary, where they’re stored before being shipped back again.

“Industrial space has now been infected with the same disease as houses,” said Murray Mullen, chief executive officer of one of Canada’s largest trucking and logistics firms, Mullen Group Ltd. Companies that are renewing industrial leases will, in some cases, be paying double what they were before, Mullen said.