Build-to-Suit: The Future of Industrial Construction in Canada

By Jeremy Dawn

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As businesses across Canada navigate the complexities of rising food costs,1 environmental impacts,2 and ongoing global supply chain disruptions,3 they are continually adapting and finding innovative ways to scale. Some regions, such as Okanagan, B.C., have emerged as an appealing expansion and relocation destination for companies seeking resilience and growth. This trend has led to rising construction needs in cities such as Penticton, B.C., as companies from Western Canadian urban centres, such as Vancouver and Calgary, look for tailored facilities and additional space to meet specific operational requirements.

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While major urban centres have experienced some moderation in demand due to cost restraints, more affordable markets in surrounding areas have picked up the slack, particularly in the industrial segment, according to the 2024 REMAX Commercial Report.4 There has been a notable surge in demand for for-lease industrial space and build-to-suit solutions in the Okanagan region, and construction companies are aiming to predict future needs by customizing spaces within their commercial and industrial buildings. This proactive approach is essential for addressing the dynamic needs of businesses today.

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Meeting diverse industrial needs

Despite historic highs in construction costs and inflation driven by demand for key materials such as concrete, the overall outlook for industrial real estate remains positive. The growing need for new manufacturing facilities and build-to-suit spaces underscores the Okanagan’s strategic importance in meeting some of Canada’s most crucial challenges.

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As interest in build-to-suit solutions increases, developers and architects must take consider several key factors to ensure these spaces are flexible and future proof for industrial tenants. Some of these considerations include:

• High ceiling heights (minimum 7.3 m [24 ft] clear) to accommodate advanced racking systems and automated equipment
• Adding natural light to enhance employee well-being and potentially reduce energy costs.
• Minimum 4 m (14 ft) high overhead doors to facilitate the movement of large equipment and vehicles.
• Adequate power capacity and future upgrading ability, such as solar energy.
• Advanced HVAC systems to provide more comfortable and flexible climatized interior areas, especially during high temperatures and wildfires.

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For warehousing, construction supply, and manufacturing industries, regions such as Okanagan offer opportunities for innovative and resilient business operations. Cities such as Penticton are seeing increased interest across various sectors for creative construction solutions to maximize space and efficiency.

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Food storage and warehousing facilities are seeking space to tackle food scarcity issues, while construction suppliers and retailers look to meet the rising demand for locally sourced products. Additionally, restoration and construction companies are establishing a local presence in communities affected by wildfires and other impacts of climate change.

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This diverse pool of tenants indicates a broader trend of businesses adapting to the realities currently challenges in Canada.

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While industrial construction is still more function-first compared to residential and office sectors, new techniques and materials are being implemented to meet the surge in demand, including:

• Modular construction of pre-fabricated components, which are assembled instead of constructed from scratch.
• Tilt-up construction, which is casting concrete panels on-site, then ‘tilting’ them into place, which reduces material and transportation costs.
• Cross-laminated timber (CLT) is starting to creep into the industry, but until it is more cost effective, preference will be given to steel and concrete.
• 3D printing of small components is becoming more prevalent, but that sector is quite early days, and will require significant refinement before used on larger scale industrial projects (mainly for structural and cost reasons).
• Using recycled and reclaimed materials can be an effective approach to sustainability, however, a lot of older materials have potential hazardous materials within them, so the volume of material to utilize is quite low, outside of steel and aggregate material.

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Emerging design trends in industrial construction are enhancing efficiency and capabilities for new businesses moving to regions such as Okanagan. Solar panels are increasingly being implemented on flat-roof industrial buildings, and smart building technology is becoming common to monitor operations and improve efficiency. Employers are also prioritizing adaptable spaces that can be reconfigured easily as businesses/sectors evolve, on-site amenities for better employee satisfaction, attraction, and retention, and treating large blank exterior walls with more esthetically pleasing finishes to better compliment the overall community (e.g. wood features, murals, glazing, etc.)

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Creative construction and optimized locations 

Driven by demand for industrial spaces, market is shifting towards personalized and efficient space usage, highlighting the need for modern construction of flexible and adaptable buildings.

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For example, a newly renovated industrial building, such as 2324 Government Street5 in Penticton, has seen increases in tenant inquiries from large markets. The high ceilings at this industrial development have been attracting industries such as vertical farming, manufacturing, restoration, and construction supply—all of which require and demand higher ceiling heights. Modern warehouses require at least 6.7 to 7.3 m (22 to 24 ft) clear height, as that allows users to install a second-floor office or mezzanine or store more goods vertically with taller racking systems.

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An uptick in requests for additional overhead doors to provide flexibility on how companies can use their space, robust electrical servicing, which is becoming more challenging in the province due to supply constraints, and dedicated space for building signage to help grow business are also becoming common building requirements.

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While the exact timeline for cost stabilization and supply chain recovery in Canada remains uncertain, the long-term outlook for industrial real estate is strong. Reports6 suggest that positive future returns continue to drive investment in the industrial sector, particularly in regions offering strategic advantages such as enhanced supply chain efficiency and lower operating costs.

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Conclusion

Construction remains a major employer in B.C.’s goods sector, with ongoing high demand and major projects underway. The industrial real estate market is expected to see continued growth, supported by trends like the e-commerce boom and increased logistics needs. While industrial land bases are shrinking in some areas due to rezoning, regions such as Okanagan are well-positioned to attract and accommodate evolving business needs.

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Case studies such as Peerless Limited in Penticton and Granite Rocks Ltd., a countertop manufacturer, highlight the practical benefits of locating in regions that offer strategic advantages for various industries.

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Construction is the second largest service-producing industry in the Okanagan, with the first being “real estate, rental, and leasing.” The construction industry directly benefits from the great real estate sector regionally, and as such, many companies have opened new locations, or relocated their entire operations to the Okanagan.

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Notes

1 Refer to cdn.dal.ca.

2 See the forecast on wildfire season at canada.ca.

3 Check out the statistics at statcan.gc.ca.

4 Review the REMAX report at remax.ca.

5 For more information, visit snflwrcorporation.com.

6 Refer to the report at avisonyoung.com.

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Read on Construction Canada here.