When it comes to assessing commercial real estate trends in B.C.’s Lower Mainland, “2022 was a sort of ‘tale of two cities,’” according to Doug Pulver, executive managing director in Colliers' Vancouver office.

For the first six months, sales trended at the brisk pace set in 2021. As Bank of Canada interest rate hikes took hold, however, “there were obvious negative implications when it came to financing transactions between what buyers could afford to pay and what sellers were asking for.”

By year-end, Pulver said, “the actual number of transactions might not have been that much different than 2021, but the total dollar value certainly wasn’t as high."

That also means many of the largest transactions in the Metro Vancouver and Lower Mainland region during 2022 were concentrated in the first six or seven months of the year. 

“Developers were simply having a challenging time forecasting what kinds of revenues they might generate in the future," Pulver explained.

"That general uncertainty caused a lot of pullback from buyers in the second half and we probably won’t see these circumstances change much until we know where interest rates are headed, and that could be well into 2023."

In short, the math no longer worked for many companies although, similar to the residential market, rising rates did not result in immediate price reductions for commercial property.

“For 2023, buyers and sellers will have to adjust their expectations accordingly,” he said.

Major 2022 transactions

The biggest sale in the Lower Mainland occurred in early March when China-based Aoyuan International unloaded The Grove condominium project adjacent to Burnaby’s Brentwood SkyTrain (4500 Dawson) hub to Anthem Properties and Kingsett Capital for $215 million.

Financially troubled Aoyuan needed the cash to avoid defaulting on its bond payments, necessitating the Grove sale and the cancellation of a luxury condo development on Vancouver’s west side.

Farther south and east in the burgeoning Surrey City Centre, Bosa Properties purchased residential land, recently rezoned for multiple high-rises, from Bristol Estates for $170 million in late July.

The biggest deal in downtown Vancouver was Allied Properties REIT’s (AP-UN-T) purchase of an office tower at 1185 West Georgia from Choice Properties REIT (CHP-UN-T) that was part of a massive transaction involving other commercial properties in Toronto and Montreal.

Colliers was involved in the sale of a series of Cineplex movie theatres in Richmond to Tria Homes, which plans to redevelop the site for multiresidential. Colliers also brokered a deal in East Vancouver which saw Dava Developments purchase the landmark Il Mercato mall on Commercial Drive from Millennium City Malls for $62.9M.

A high-rise retirement lodge surrounded by Vancouver General Hospital on West Broadway was secured by VGH and the UBC Hospital Foundation for $100 million. 

In Port Moody, a 14.8-acre land assembly consisting of 59 single-family lots was sold by an unidentified individual to Wesgroup Properties for $119 million. Wesgroup has applied to the City of Port Moody for a comprehensive development zoning designation. 

Housing remains a key issue

Regardless of where interest rates go, Pulver says Lower Mainland’s municipalities need to work harder to understand developers’ needs, especially in creating both market-based and affordable housing for Vancouver’s much-publicized "missing-middle" class.

“The amount of red tape and the time it takes to bring projects to market in some of these municipalities creates a real barrier to solving B.C.’s housing crisis," Pulver noted

Geographically constrained by the Coast Mountains to the north, the Salish Sea in the west and the U.S. border to the south, Vancouver faces challenges to growth that aren’t faced by other Canadian cities. 

Add in the extensive amount of acreage still impounded in the massive Agricultural Land Reserve and the high cost of attracting and retaining construction labour, and it becomes very challenging for developers to make the numbers add up, especially when it can take decades for approvals to be signed and stamped. 

“We have a world-class community of development professionals wanting to solve these issues,” Pulver said. 

The Top-10 transaction list

Below is the Metro Vancouver and Lower Mainland Top-10 list of commercial real estate sales in 2022, courtesy of Colliers:

1. 4500 Dawson St., Burnaby – $215 million – Multiresidential land, sold by Aoyuan China to Anthem Properties/KingSett Capital;
2. 13301 104th Ave., Surrey – $170+ million – Multiresidential land, sold by Bristol Estates Holdings to Bosa Properties;
3. 4444 and 4448 Kingsway, Burnaby – $145 million – Multiresidential land, sold by Bosa Blue Sky Properties to Keltic Development;
4. 1185 West Georgia, Vancouver – $135 million – Office tower, sold by Choice REIT to Allied Properties REIT (part of multi-property deal);
5. 106 Buckingham Dr., Port Moody – $119+ million, Multiresidential land, sold by an unnamed private party to Wesgroup Properties;
6. 7590, 7664 & 7688 80th St., Delta – $117 million, ICI land, sold by Cosulich Group Investments to Beedie Group;
7. 1795 Willingdon Ave., Burnaby – $112+ million, Multiresidential land, sold by Halifax Properties to Concert Properties;
8. 19469 & 19511 92nd Ave., Surrey – $111 million, ICI land, sold by Lloyd Investments to Conwest Group;
9. 10355 King George Blvd., Surrey – $108+ million, ICI land, sold by Crombie Property Holdings to Wesgroup Properties;
10. 900 West 12th Ave., Vancouver – $100 million, ICI land, sold by Windermere Retirement Lodge to the VGH and UBC Hospital Foundation.