By Melanie Jackson, Vancouver Sun
Artist's rendering of the Marine Gateway project.
Photograph by: Handout , PCI Developments
VANCOUVER — Making up a significant part of 58 transactions across B.C. totalling more than $724 million in the first half of 2013, Vancouver commercial real estate is at near-record demand – heightened by downtown owners’ refusal to sell even one property during that period, according to Avison Young’s Mid-Year 2013 BC Real Estate Investment Review.
Even without any blockbuster deals, that first-half total is the second highest since 2002, says the semi-annual report, which tracks B.C. office, industrial, retail and multi-family property sales transactions greater than $5 million. The largest office deal – and the largest overall – was a REIT (real estate investment trust) purchase of Discovery Parks, on Great Northern Way, at $66,135,000. Of the 10 office deals, two topped $20 million, with five exceeding $10 million.
By contrast, the first half of 2012 saw total B.C. sales reach $1.39 billion – though last year was a bit of an anomaly, points out Robert Levine, principal at Avison Young. “The sale of Bentall 5 downtown, in late spring, for $401 million, distorted the numbers.”
The hunger for downtown space is reflected in Vancouver’s ever-busier skyline. Avison Young’s Metro Vancouver Office Market Report Mid-Year 2013 lists nine projects currently under construction, with completion dates from 2013 to 2016, including Bentall Kennedy’s office-retail, 365,000 square feet (office), at 745 Thurlow; and Cadillac Fairview’s office-retail, 305,000 square feet (office), at 725 Granville.
However, even with this almost unprecedented construction, “it will always hard to buy downtown,” says Levine. “That’s been the case for 20 years now: the expectation that good real estate doesn’t come along that often. People who’ve bought are in it for the long term.”
Buyers may be frustrated with the lack of product, but they’re not about to start looking elsewhere. “They realize that growth in other places isn’t as good. The risks will be higher. Pricing is falling off in secondary places like the interior of B.C. and Vancouver Island, and in the smaller towns. For example, people are realizing that the property they may have bought in Nanaimo isn’t giving the same kind of returns.”
As well as Discovery Parks in Vancouver, notable urban sales included: Abbotsford’s 33991 Gladys Avenue, at $20,250,000; Victoria’s Board of Trade building at $8,065,000, and Milne Building, at $8,090,000; and Richmond’s Riverside Business Centre at $7,600,000.
Levine is keeping an interested eye on Abbotsford. “It’s my personal belief that Abbotsford is very attractive to buyers. There’s a lot more land there. There’s the Port Mann Bridge infrastructure, which brings [Abbotsford] a lot closer to Vancouver.” All this appeals to long-term investors looking to buy for 15 to 20 years down the road, he says.
Closer in, Vancouver’s recent $370 million Marine Gateway deal – closed after June 30, so not reflected in the Avison Young Real Estate Investment Review – also highlights the premium buyers place on accessibility. The 820,000-square-foot PCI Developments project, to be completed in 2015, is right by both the Marine Drive SkyTrain station and the 500-buses-a-day South Vancouver bus loop.
The project includes 415 residential condos, 46 rental units, retail and public space, a state-of-the-art Cineplex, and an office building to be more than 50 percent occupied by the engineering technology company Westport, consolidating its Lower Mainland locations.
Even here, away from downtown, the buyers were hungry. “Our condos sold out quickly, in the spring of 2012, virtually in one day,” says PCI President Andrew Grant. “Over 90 per cent of our buyers said the location by transit was a strong part of their decision.” Grant expects Marine Gateway to generate more than two million transit trips a year.
“The condos without parking spaces also sold right away,” he says. “The old days of isolating land use — this is where your office is; this is where you work — are gone. People can’t afford multiple automobiles.”
Or, to be bothered with any at all. Marine Gateway will offer both a cooperative car network and a bicycle mobility centre.
It’s a time as well as money issue. Increasingly, people don’t want to be stuck in long commutes — a quality-of-life need that Marine Gateway and other high-density projects answer with the live-where-you work option.
Linking Main and Cambie, “at the heart of the development, will be an active high street, or what we call 'retail podium,' for pedestrians. Approximately 46,000 feet will be a supermarket, the Loblaw’s T & T brand. This is being very well-received by the neighbourhood, as there’s very little grocery shopping there now.”