I have attach a little background on this to get you started.

1st. How have you quantified shrubs and grasses? Are these really continuous?

2nd. You have noted an important point. PERMANOVA is design for categorical designs and is a permutational analogue of ANOVA; however you are modelling species data (BC similarity) on continuous environmental variables, which can be thought of as multivariate multiple regression (or Redundancy analysis - redundancy can be thought of as "explained variance") or better still (because RDA is on Euclidean distance) dbRDA or distance based redundancy analysis.

dbRDA is found in VEGAN and should allow you to perform stepwise modelling of your species data (using ANY distance measure) in much the same way as you would in a multiple regression.

PERMANOVA is not what you want here, but note for later use, that you can include 1 or more continuous co-variates into this design.