British Columbia’s commercial real estate market experienced a banner year in 2021, with a higher-than-usual number of deals valued at over $100 million, making for an impressive top-10 list of transactions.
Industrial, multiresidential, mixed-use development land and office are proven sectors showing no signs of slowing through 2022, industry experts say. There might not have been an outlier like the huge $1-billion Bentall Centre deal in 2016, but a series of major deals showed the Greater Vancouver Area and Victoria are benefiting from a strong investment environment.
“It’s remarkable how resilient real estate in Vancouver has been across all asset classes,” Colliers senior managing director Darrell Hurst told RENX.
The largest Metro Vancouver transaction in 2021 was Intracorp’s expansion of the Ashley Mar housing co-op at Marine Drive and Cambie Street, a 1.5-acre residential deal valued at more than $300 million, according to Colliers. Intracorp is partnered with Oxford Properties on the redevelopment.
Also chiming in at over $300 million was Keltic Canada Development’s purchase of 27 acres of light industrial land at 5900 No. 2 Road, near the Olympic Oval.
Mayfair Shopping Centre tops Victoria transactions
The sale of Mayfair Shopping Centre at 3147 Douglas St. in Victoria was also a major transaction at $260 million, according to Avison Young. The purchaser, Central Walk, operates real estate projects in Southeast Asia and North America, particularly shopping centres.
Central Walk also purchased Woodgrove Centre in Nanaimo in September 2020, which had also been owned by Ivanhoé Cambridge.
“We have certainly seen more $100-million deals and $50-million deals, and north, than we’ve probably ever experienced before,” said Hurst, who has over 30 years of brokerage experience and also asset-managed a portfolio for a local developer. He called it “the best year” in his company’s history in the city.
Bob Levine, a founding partner at Avison Young, also called it a banner year. Levine has 40 years in the commercial real estate industry.
“It’s been a very good year and it’s really hard to see the storm clouds for (2022),” said Levine. “We haven’t had these massive institutional sales, but there have been an awful lot of deals done.
“I’m talking deals over $5 million, which is basically what we track, and there’s been a ton of them. There’s been lots of activity. We are approximating it at around $4.8 billion on deals over $5 million, which is the highest dollar volume since 2018.”
Levine cited development lands for mixed-use, whether residential or residential with commercial, as one of the four hottest sectors.
“Industrial has been crazy,” he added, “and I think multifamily rental has had the best year ever. And the fourth category where there have been a lot of transactions relative to history is in the office.
“There have been probably six downtown office sales I would say, and all pretty sizeable transactions. And six is a lot compared to downtown Vancouver typically.”
Major office trades in Metro Vancouver
Major office deals included the two Standard Life buildings at 888 Dunsmuir St. and 625 Howe St. in downtown Vancouver, a $240-million deal.
Other major downtown deals included 1138 and 1150 Melville St. ($156 million), 815 Hornby St. ($93 million) and the 15-storey heritage Standard Building at 510 W. Hastings St. ($88 million), sold by the Aquilini Investment Group.
Low Tide Properties, in partnership with PCI Developments, purchased the former MEC headquarters at 1077 Great Northern Way for $103 million. Retailer MEC hadn’t been in the new four-storey, 120,000-square-foot building very long before the co-operative was sold to U.S. private firm Kingswood Capital Management, in 2020.
The historic Dominion Building at 207 W. Hastings St. sold to Allied Properties REIT for $65 million, said Levine: “These are all pretty high-volume properties.”
The reasons for selling varied, he added.
“I think what this is about is that some vendors decided that the pricing was so good they’d take money off the table and that would be the case with the (Hydro-Quebec Pension Fund) building on Melville.
“They must have thought they were getting a heck of a price for it. And some of the other deals I think could be generational — what I mean by that is that the owners are getting on in advanced ages and the next generation is perhaps not interested, so let’s dispose.
“In the case of the old Standard Life buildings . . . Manulife sold them, but they were probably buildings that didn’t quite fit into Manulife’s portfolio in that they weren’t as big or high-quality as what Manulife is typically interested in. So they sold them and got $240 million for it.”
False Creek Flats acquisition
Colliers’ list included the Low Tide Properties purchase of a 2.1-acre site at 1155 E. 6th Ave., along the emerging False Creek Flats employment district, for $117.5 million.
“You can see within our top-10 list that there were some notable transactions within that particular segment, which I think again reinforces the strength of the office market in Vancouver,” said Hurst.
“It’s still a highly desirable asset class that both institutions and the private sector want to be in and want to have ownership in.”
He points to the purchase of the two Manulife Financial towers by private investment company Sunnyland Group, located in Burnaby.
“It’s evidence that in spite of our work-from-home strategies employed by a number of corporations in a wide variety of industry sectors, I think there is a strong belief by many that people will return to the office.”
The active tech sector, including gaming and software consulting, is continuing to expand.
Strata industrial market expanding
The red-hot industrial sector is a response to the strength of e-commerce amid a pandemic, as well as a record low vacancy rate of around 0.4 per cent.
“We are climbing, we are getting up there,” said Hurst. “And our strata market has been a phenomenon we haven’t seen before, and that’s gaining in momentum — and not just the owner/users, but the investor side of strata industrial is really hot and active in many geographies throughout the Lower Mainland.
“I would say that the low interest rate environment is only one aspect of what is the driving force,” he added. “The fact that there was pent-up demand and a lot of money that had been sitting on the sidelines for a fair amount of time also added to the impact that we felt in 2021.
“Clearly what we’ve seen in 2021 has been a nice bounce back.”
Top-10 Metro Vancouver, Victoria transactions in 2021
The *Top-10 Metro Vancouver and Victoria transactions during 2021, by dollar value. (Compiled from data supplied by Colliers and Avison Young, which use different criteria and include different sectors in their individual assessments):
1. 8460 Ash St., 8495 Cambie St., Vancouver: $300-plus million. Land – multiresidential. Sold by Ashley Mar Housing Co-op to Intracorp.
2. 5900 No. 2 Road, 6191-6311-6751 Westminster Hwy., Richmond: $300+ million. 27 acres of land – mixed-use. Sold by QuadReal to Keltic Development.
3. Mayfair Shopping Centre. 3147 Douglas St., Victoria: Retail. $260 million. Sold by Ivanhoe Cambridge to Central Walk.
4. 888 Dunsmuir St., 625 Howe St., downtown Vancouver: Office. $240 million. Manulife Financial to Sunnyland Group. 255,000 square feet.
5. 3100 Production Way, Burnaby: Industrial. $185 million. Sold by Blackwood Partners to Fiera Real Estate.
7. 7000 Lougheed Hwy., Burnaby: Land – high-density residential. $151 million. 13.95 acres. Sold by BCMP RE Corp. No. 1 Ltd., to Create Properties Ltd.
8. Eagle Creek Village, 29 Hemcken Rd., Victoria: Retail. $140 million. Sold by Blackwood Partners to Jim Pattison Group.
9. 3990 Marine Way, Burnaby: Land (film studio/mixed-use). $136 million. 17.1 acres. Sold by City of Burnaby to Larco Investments.
10. 1011 Beach Ave., Vancouver: $135 million. Multiresidential. Martello Tower apartments with land for intensification. Sold by No. 260 Seabright Holdings Ltd., to Mayfair Properties.
* Editor’s Note: This list is based on transactions and data available through early January.