Commercial real estate in B.C. sees strong sales, except in one area

Vancouver commercial real estate | BCBusiness

Office and retail markets remain strong, while industrial land deals dwindle to a four-year low

Demand for investment properties drove commercial real estate sales in the first half of this year to their highest level since 2012, according to a report on B.C.’s real estate investment market published Friday by brokerage Avison Young.

“There’s far more capital looking for product than owners are prepared to sell,” says Michael Gill, principal at Avison Young.

Despite the high number of transactions—$852 million in commercial property changed hands in the first six months of 2014, the third highest figure since 2002—owners are reluctant to put commercial property on the market, as “it’s difficult to turn around and reinvest in similar product,” says Gill.

While sales volume remained strong in both the office and retail markets, in part because of interest from foreign investors from China and Southeast Asia, the number of industrial land deals dwindled to a four-year low. Metro Vancouver’s eroding industrial land base, pressured by suburban residential development and the confines of the region’s geography, has driven vacancy rates to a low 3.6 per cent. The authors of the report expect that figure to continue to decline.

High demand for commercial investment property has led crown corporations and government agencies to unload office space, notes the report. The provincial government and the City of New Westminster have sold $105 million alone in property this year.
 
In the biggest deal of the year so far, investor H&R REIT sold a 50 per cent stake in the “Telus Boot” building in Burnaby for $87 million.