The $225-million sale of The Landing in Vancouver’s Gastown is the biggest B.C. property deal of the year so far
Spring may have been tough, but the COVID-19 pandemic did little to dull investors’ appetite for properties this year, partly thanks to cheaper financing
The province’s office, retail, industrial and multifamily property markets took a hit from COVID-19 this year, but the pandemic failed to break their stride.
The first quarter of 2020 was a busy time for investment deals, says Bob Levine, Vancouver-based managing partner with real estate services firm Avison Young. After the pandemic struck, activity died off as investors tried to figure out what was happening, Levine explains.
“But I would say since late summer, the tempo has really picked up,” he says. “Investors spent between April and July looking for the COVID discount, and there was no COVID discount in terms of pricing. Where the discount really was was that the cost of financing got so cheap.”
A good example is the recent sale of the Penticton Plaza strip mall, in which Avison Young represented the owners, Levine says. That transaction closed for $15.55 million in November, making it No. 6 on the firm’s list of the 10 biggest B.C. retail property deals of the year so far.
The owners first talked to Avison Young about selling the mall in February, Levine recalls, only to put things on hold when COVID struck. “And then late summer, early fall, they said, OK, let’s go and do it.” After investors showed plenty of interest, Penticton Plaza sold for as much as or perhaps even more than it would have fetched in February, Levine says.
“Part of the reason was, none of the tenants there were really, other than on the short-term basis, affected by COVID,” he adds, noting that they provide necessary retail services. “But the big difference was that the cost of financing came down substantially. And for investors, that’s a big thing.”
As for the properties that are suffering the most from COVID, “it’s obviously hotels and enclosed shopping centres that have got a lot of fashion tenants, and maybe some of the high-end retail on Robson or Alberni Street,” Levine says. “But there’s no evidence out there that I can say, Hey, there’s a discount for those categories, because there haven’t been any transactions.”
Overall, the market for office, retail, industrial and multifamily properties remains strong, Levine observes. “It hasn’t shot up like the stock market, but it certainly has a similar momentum,” he says. “There’s lots of money looking to place into those types of real estate.”
Below you’ll find Avison Young’s rankings of the top 10 B.C. deals of the year in those four categories, with their closing dates and sale prices. Please note that other transactions remain in play, so the lists aren’t the final word for 2020.
Top 10 office deals
The No. 1 office deal and the biggest real estate transaction of the year to date: the sale of The Landing, a waterfront complex in Vancouver’s Gastown, for a cool $225 million in April. Toronto-based Allied Properties Real Estate Investment Trust (REIT) bought the mixed-use building from Greg Kerfoot, owner of the Whitecaps FC soccer club. At the time of the sale, BC Assessment valued The Landing at $120.9 million.
“It was the location; it was a good-looking building,” Levine says. “But it was also widely marketed. There were quite a few offers on it.” As Levine points out, Allied Properties REIT made its unconditional cash offer for the property pre-COVID. “They paid a very healthy dollar,” he says. “I don’t know if they’d pay that today because that building has a fair amount of walk-by retail that depends on tourism, and a lot of that, I’m sure, has been hurt.”
Asked about demand for office during the pandemic, Levine says some B.C. businesses have put their properties up for sublease. “There’s a fair amount of small spaces available, like under 5,000 [square] feet,” he says. “People maybe have decided, Well, I don’t need this overhead right now; we’ll just continue to work from home.”
However, Levine doesn’t know of any major local company that has decided to shrink its office footprint. “I think most of them are taking very much a wait-and-see approach,” he says. “They probably don’t know whether they’ll need less office space or more.”
1. The Landing, 375 Water Street, Vancouver
2.Crestwood Corporate Centre, 13511-13775 Commerce Parkway, 13700-13711 International Place and 13811 Wireless Way, Richmond
3. Willingdon Business Park, 4321 Still Creek Drive, Burnaby
4. 9500 Glenlyon Parkway, Burnaby
5. 2695 Granville Street, Vancouver
6. Grandview Pointe, 2121 and 2181 160th Street, Surrey
7. 120 Lonsdale Avenue, North Vancouver
8. 664 West Broadway, Vancouver
9. 12148 Horseshoe Way, Richmond
10. 535 West 10th Avenue, Vancouver
Source: Avison Young
A 50-percent stake in Nanaimo’s Woodgrove Centre mall fetched close to $100 million
Top 10 retail deals
In the highest-ranking retail transaction, Weihong Liu paid almost $100 million in September to buy a 50-percent stake in Nanaimo’s Woodgrove Centre mall from property manager Ivanhoé Cambridge. Liu, who previously owned shopping centres in her native China and has lived on Vancouver Island for six years, plans to redevelop the property, according to a recent CHEK news report.
Woodgrove Centre is one of several malls in the top 10 list. Some, like Ladner’s Trenant Park Square and Delta Shoppers Mall (No. 2 and No. 3, respectively), may also be for future development, Levine reckons. “Most of those strip malls, the tenants have done pretty well,” he says. “You might find they were on rent relief for three or four months, but now they’re back to business.” Such properties offer a wide variety of goods and services, including liquor, which most people prefer to buy in-person rather than online, Levine notes.
1. Woodgrove Centre (50-percent interest), 6631 and 6901 Island Highway North, Nanaimo
2. Trenant Park Square, 5201 Ladner Trunk Road, Ladner
3. Delta Shoppers Mall, 8037 120th Street, Delta
4. 465 North Road and 500 Austin Avenue, Coquitlam
5. 828 Automall Drive, North Vancouver
6. Penticton Plaza, 1301 Main Street, Penticton
7. 1230 Davie Street, Vancouver
8. 19561 and 19575 Langley Bypass, 19564 and 19574 60th Avenue, Surrey
9. Huntingdon Station, 2047 and 2061 Sumas Way, Abbotsford
10. 1452, 1456 and 1460 Lonsdale Avenue; 109, 113, 115 and 117 East 15th Street, North Vancouver
Source: Avison Young
The Lake City Lands in Burnaby sold for $146 million
Top 10 industrial deals
Among industrial properties, Burnaby’s Lake City Lands led the way, selling in February for $146 million to privately held local firm Larco Investments, which plans to build a film studio on the site.
Avison Young recently completed a $150-million industrial sale for new construction, Levine says. “It hasn’t closed yet, but it’s a firm deal,” he adds. “We were out in the market for that during COVID, and we had quite a number of offers on it in a fairly tight range. So industrial is very much in favour. Vacancy rates are very, very low.”
Nine of the top 10 industrial deals were in the Vancouver area, but the rest of B.C. is pulling its weight, too. “We do see industrial emanating out of the Lower Mainland,” Levine says. “If you look at the Okanagan, industrial’s hot. Vancouver Island’s actually always had higher rental rates for industrial than we’ve had here in Vancouver. They have a really tight land supply, so there’s very strong interest pretty well everywhere you go for industrial in this province.”
1. Lake City Lands, 7725 Lougheed Highway; 3131, 3151 and 3171 Lake City Way, Burnaby
2. 1725 Coast Meridian Road, Port Coquitlam
3. 6064 Spur Avenue and 8335 Meadow Avenue, Burnaby
4. Viking Way Business Centre, 3671 Viking Way, 3691 Viking Way, 13511 Crestwood Place and 13520 Crestwood Place, Richmond
5. 2220 and 2270 Dollarton Highway, North Vancouver
6. 18646 and 18688 96th Avenue, Surrey
7. 5300 and 5350 Byrne Road, Burnaby
8. 6333 and 4620 Pacific Street, Prince George
9. 2595 Deacon Street, Abbotsford
10. 3455 Gardner Court, Burnaby
Source: Avison Young
Vancouver’s Plaza 500 apartment tower went for $82.5 million in a foreclosure sale
Top 10 multifamily deals
Taking first place in the multifamily category, Vancouver’s Plaza 500 apartment tower, across the street from city hall, sold for $82.5 million in June. “That was a foreclosure sale, but I understand there was good interest in it,” Levine says. Besides 17 storeys of rentals, the building has commercial space at street level. CBRE Group, which represented the owners, has said redevelopment may follow.
At $54 million, the fourth-largest multifamily deal was in Victoria. No. 5 and No. 9 were both in up-and-coming Langford, part of the Capital Regional District. “We’re starting to see a lot of our clients looking for things in Victoria as well as Vancouver a lot more than they have in the past,” Levine says. “That whole Greater Victoria area has really changed over the last three or four years in terms of demand for commercial or residential or industrial properties. Even big development sites attract a lot of interest, and there’s a lot of people moving over there.”
1. Plaza 500, 500 West 12th Avenue, Vancouver
2. Fontainebleau Apartments, 5455 Balsam Street, Vancouver
3. Trio, 333-337 Drysdale Boulevard, Kelowna
4. Christie Point Apartments, 2861 Craigowan Road, Victoria
5. The Star on Goldstream, 1085 Goldstream Avenue, Langford
6. Harley House, 1230 Nelson Street, Vancouver
7. The Beverley, 508 Agnes Street, New Westminster
8. North Grove, 6971, 6973 and 6975 Island Highway North, Nanaimo
9. The Arc, 2849 Bryn Maur Road, Langford
10. Arcola Manor (7035 Arcola Street) and Gable Gardens (7035 Balmoral Street), Burnaby
*also includes development land
Source: Avison Young