For Immediate Release (3 pages)
Wednesday, April 13, 2016
Contact:
Andrew Petrozzi
604.646.8392
email: [email protected]
Editors/Real Estate Reporters
∙ Please click on link to view and download Avison Young’s Spring 2016 North Shore, BC
Commercial Real Estate Market Report:
http://www.avisonyoung.com/fileDownloader.php?file=files/contentfiles/Offices/Vancouver/Research/2016/AYSpring16NorthShore_web.pdf
Demand exceeds supply on British Columbia’s
North Shore as investment dollar volume declines
Mixed-use development sites remain in high demand
Vancouver, BC — A lack of supply of existing assets and the absence of significant new
development on the North Shore of British Columbia resulted in a decline in commercial real
estate investment in 2015. The combined sales totals for industrial, office and retail assets
dropped to $139 million – down almost 20% from the $173 million invested in 2014 and 44%
from the $249 million spent in 2013. While dollar volume associated with the acquisition of office
(-46%) and retail (-31%) assets declined year-over-year in 2015, spending on industrial assets
increased by 30%. A lack of supply of all asset types has dampened investment volume despite
persistent strong demand for commercial real estate.
These are some of the key trends noted in Avison Young’s Spring 2016 North Shore, BC
Commercial Real Estate Market Report, released today.
Office sales remained muted in 2015 as there were few assets for sale, and those office
transactions that did occur were typically for small buildings and strata units. There were 32
office deals in 2015 valued at $29 million – the lowest dollar volume recorded since 2010. Only
three office properties traded for more than $2 million, with the vast majority of deals involving
strata units priced at less than $1 million.
With office vacancy down to 7.3% at year-end 2015 from 7.8% a year earlier, potential
purchasers of office are reaching to match vendors’ higher expectations in light of some
renewed positive news in the office leasing environment. With the delivery of approximately
80,000 sf of new office supply for lease scheduled for the end of 2017 / early 2018, the market
could well be in need of some new supply if this increase in demand continues.
“Ongoing user interest in strata office units will drive the office market in terms of overall
investment moving forward,” comments Avison Young Principal Ian Whitchelo. “Absorption of
vacant office space remains limited and highly sensitive to rental rates. The slow (but steady)
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absorption of office space since 2013 bodes well for the upcoming delivery of new product in
2017, but market indicators suggest a continued cautious approach is needed to maintain the
mainly favourable office market conditions currently in place.”
The acquisition of industrial assets on the North Shore totalled $61 million in 2015, but more
than half of the total dollar volume was the result of just two transactions: Keith Business
Centre ($24 million) and 758 Harbourside Drive ($7.25 million). Of the 28 industrial deals
completed in 2015, virtually all of them were for strata units. With very limited new strata (or
lease) product in the development pipeline and strong demand for industrial assets generally
unfulfilled, industrial vacancy tightened to 0.9% at year-end 2015.
“Demand for industrial space – lease and strata – is anticipated to remain strong in 2016 and
the years ahead as redevelopment plans involving existing industrial properties reduce supply,”
says Avison Young Principal Mehdi Shokri. “It is anticipated that additional assembly work and
consolidation will continue in 2016 with some refurbishment of existing industrial product as well
as limited industrial strata product being delivered.”
In addition to office and industrial activity, retail sales and leasing remains an integral
component of the commercial real estate market on the North Shore.
With 28 retail transactions valued at $48.7 million on the North Shore in 2015, a lack of supply
combined with the redevelopment potential attached to the underlying land pushed the desire to
acquire retail assets to the forefront for many investors. That strong demand and record pricing
is expected to continue in 2016 and contribute to further cap rate compression for those few
retail assets that change hands.
Matt Thomas, a Vice-President in Avison Young’s Vancouver office who specializes in North
Shore commercial real estate sales and leasing, adds: “Strata units remain a popular option,
particularly in established retail nodes such as Lower Lonsdale and the emerging Lonsdale
Quay area, where pricing is expected to increase in 2016. While retail lease rates are expected
to remain stable in 2016, the impact of any increases in property taxes on retail lease rates will
be a key factor to watch and may place more pressure on landlord and tenant negotiations.
Mixed-use developments continue to offer most of the new retail opportunities on the North
Shore.”
Avison Young’s Spring 2016 North Shore, BC Commercial Real Estate Market Report also
features a review of the various transportation infrastructure projects proposed or under
construction in the City and District of North Vancouver.
Avison Young is the world’s fastest-growing commercial real estate services firm.
Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and
operated by its principals. Founded in 1978, the company comprises 2,200 real estate
professionals in 77 offices, providing value-added, client-centric investment sales, leasing,
advisory, management, financing and mortgage placement services to owners and occupiers of
office, retail, industrial and multi-family properties.
--end-For further information/comment/photos:
• Andrew Petrozzi, Vice-President, Research (BC), Avison Young: 604.646.8392
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• Ian Whitchelo, Principal, Avison Young: 604.647.5095
• Mehdi Shokri, Principal, Avison Young: 604.647.1355
• Matt Thomas, Vice-President, Vancouver, Avison Young: 604.646.8383
• Michael Keenan, Principal and Managing Director, Vancouver, Avison Young: 604.647.5081
• Sherry Quan, Principal, Global Director of Communications & Media Relations,
Avison Young: 604.647.5098 or cell: 604.726.0959
www.avisonyoung.com
Avison Young was a winner of Canada’s Best Managed Companies program in 2011, 2012,
2013 and 2014 and requalified in 2015 to maintain its status as a Best Managed Gold company
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