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Friday, March 11, 2011

Real Estate and British Columbia’s Coastal Forest Industry

Some of the largest land sales to occur in Metro Vancouver over the past decade were those of large parcels owned and used by the Coastal Forest Industry. Some examples are:
  • Weyerhauser selling 23 acres in Delta for $15,000,000 in June 2010
  • Canadian Forest Products selling 45 acres in New Westminster for $44,670,000 in February 2009
  • International Forest Products selling 49 acres in New Westminster for $30,100,000 in August 2009
  • Western Forest Products selling 39 acres in New Westminster for $40,910,000 in March 2008
  • Western Forest Products selling 16 acres in Vancouver for $13,525,000 in December 2006
  • Western Forest Products selling 18 acres in Vancouver for $12,000,000 May 2005
  • Canadian Forest Products selling 42 acres in Vancouver for $21,158,000 May 2002

Many of these sales were to a federal body, Port Metro Vancouver, which is Canada’s largest and busiest port. These lands will be utilized as strategic assets of the Port going forward.

This week The Economist published an article titled Canada's lumber industry: If you go down to the woods You’ll find a Chinese surprise which briefly outlines the ongoing dispute between Canada and the US on the trade of lumber between the two countries. Historically the US has held the upper hand as they accounted for majority of Canadian exports; however within the past two years 24 mills throughout British Columbia have reopened to service demand created in China due to government and industry marketing efforts in China. Some industry insiders also attribute the growth to a 25% tax Russia added to log exports in 2008, which is detailed along with Canadian and US efforts to foster Chinese demand for forest products in a recent article in Pallet Enterprise.

Where am I going with all this? If US demand rebounds and Chinese demand continues to grow, British Columbia’s forest industry could face a boom, which would undoubtedly bring about a revival for the coastal sector of the industry. However, with so much of the lands used historically for production now dedicated for port use, where will the logs be processed? Luckily there is still capacity, on the outskirts of the Metro Vancouver region (Surrey, Langley, Pitt Meadows, Maple Ridge, and Mission) where land prices are lower and did not spur sales at record numbers as they did closer to the core. These properties are either in mothballs or riding out the downturn with a few up for sale with muted interest. Not so surprisingly, some of the groups actively kicking tires are from China.

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