Wall Financial Corporation has purchased a 30-unit rental apartment at 1065 Pacific St. in Vancouver with the intent of rezoning the 12,969-square-foot site and redeveloping it with a 32-storey rental building.
The property was owned for several years by a private family and had been on the market for a couple of years, according to Mark Goodman, principal of Goodman Commercial, which represented the vendor in the transaction. The deal went under contract in October and closed on Jan. 31.
Goodman told RENX there was considerable interest in the property, which is in a prime location just west of the Burrard Street Bridge and two blocks north of Sunset Beach. It offers easy access to Stanley Park, shops, nightlife, restaurants and public transit.
“It was a challenging deal because we needed someone who was sophisticated enough, and who had an understanding of how something like this could work, and somebody patient who could take the time and go to work with the city,” said Goodman. “So that's why it took so long.”
Wall Financial has developed 15,000 rental units, more than 10,000 condominium units, thousands of single-family housing lots and two hotels since it was founded in 1969.
Purchase price based on zoning determination
The transaction involves a two-pronged payment structure that should end up with a valuation close to the property’s $18.95-million list price. A base price was paid and a bonus payment will be triggered, based on a predetermined formula, upon the rezoning of the site and the determination of its density.
The previous owner hadn’t taken any steps toward achieving rezoning of the site, according to Goodman. He called it a “historic shift for Vancouver’s West End” since such properties haven’t come forward in a long time.
“The new owners will take it through the rezoning and facilitate the construction and there will be a new tower featuring both market and below-market rentals,” said Goodman.
“It’s really going to breathe new life into the west end and finally provide an opportunity for future renters — including families, downsizers and working professionals — who are desperately seeking needed rental housing.”
Wall Financial is proposing to replace the existing structure with 144 market rental units and 36 below-market rental units in a 32-storey building encompassing 151,453 square feet. It would also include five levels of underground parking to accommodate 100 vehicles and 344 bicycles.
Metro Vancouver apartment transaction activity
The Goodman Report, which tracks apartment building sales in Metro Vancouver, recorded 130 such transactions valued at $2.04 billion in 2022. That compares to 161 valued at $2.58 billion in 2021.
The first quarter of 2022 continued the strong momentum of 2021 Vancouver apartment sales, but the smooth sailing didn’t continue through the rest of the year as seven Bank of Canada policy interest rate hikes totalling 400 basis points considerably slowed transaction activity.
There seems to be a shift in sentiment this year, however. Goodman Commercial has conducted 25 tours of two side-by-side buildings in Kitsilano, with multiple offers coming in, and it recently put a building under contract in Kerrisdale.
A number of new listings will be coming onstream in the next few weeks.
“I would say there is renewed optimism that the worst is over,” said Goodman.
“There's been a slight adjustment, which is understandable since cap rates have had to necessarily increase due to the increased borrowing costs. But I think buyers and sellers are embracing the new reality and we're going to see a return to more liquidity in the market soon.”