Business hands Vancouver a commercial property boom

There were 85 transactions last year totaling a volume of about $1.5 billion. The best year on record was 2010, with just under $2 billion in commercial sales. This year, investors were attracted by the low cost of debt, said Avison Young’s report.

“Fundamentals in the market are as sound as ever,” said Michael Keenan, principal and managing director of Avison Young’s Vancouver office. “Office, industrial and retail sales remain strong. There is not a particular area I can point to and be concerned about.”

But Keenen said supply is an issue, as there’s little new office space coming until 1 million square feet hit the downtown core in 2015. And even then, the new offerings are expected to just meet the demand, not overly exceed it.

“We are unlikely to see any significant vacancy issues downtown arising from any new office construction scheduled to come to market in late 2014 and 2015,” said Keenan, noting there has recently been more activity than he’s ever seen before in the office sector.

Office property sales were at $499 million in 20110, up $482 million in 2010, an increase of about 3.5%.

On the industrial side, volume was up 15% in 2011, from $314 million to $360 million, despite fewer trades.

Avison Young Principal Robert Gritten said owners have been holding onto industrial assets, putting a tight limit on supply despite interest rates continuing to push demand.

Retail assets, however, saw a drop of 46% in assets to $624 million from $1.1 billion in 2010. But while volume was down, prices remained high. “Vendors are seeing pricing they never thought they would see,” said Keenan. “Every time you thought no one would pay more, someone did. However, instinct is saying that it is hard to imagine this upward price trend continuing.”

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