The report cites a limited supply of quality inventory combined with the region’s wealth and proximity to downtown Vancouver that has been attracting mostly local developers and investors in the office, industrial and retail sectors.
In 2010, retail property investment in the North Shore surged a whopping 460% over 2009, going from $17 million to $93 million, according to RealNet Canada.
Half of that 2010 total was from a $47 million purchase at 845 Marine Drive in North Vancouver, which includes tenants Bed Bath & Beyond, Thrifty Foods, and Golf Town.
Terry Thies, a principal with Avison Young, told CRE that he expects the local commercial market to remain healthy going forward, especially with the price of borrowing relatively low.
“The North Shore market has a limited amount of development supply available for future growth, so we will expect commercial real estate values to remain strong, and in some areas even increase, albeit at a slower pace than some other markets,” he said.
Thies said many developers are searching for mixed use opportunities and several are already underway on Marine Drive. There are also a number of strata developments underway, three of which are available for presale. Ground floor retail properties on Marine Drive are achieving an average lease rate of $35 per square foot, according to Avison Young’s report.
Thies said business confidence is on the rise, and leasing activity has also started to increase. While he didn’t have exact numbers on vacancy rates, Thies said he’s noticed increased leasing activity since the fall of 2010 in the office and industrial sectors. He estimated office vacancy is down close to 8% in the North Shore, and the industrial rate is just above 2.5%, which is one of the lowest in Metro Vancouver.
“The office market, which was slow for the past year, has picked up considerably,” said Matt Thomas, an Avison Young associate specializing in North Shore commercial real estate. “Sublease product that was sitting on the market is starting to move.”
In the industrial sector, lease rates remain among the highest in Metro Vancouver, according to Avison Young, ranging from $9 to $14 per square foot.
Thies said the increase in commercial real estate activity lately has mostly been local, despite the increase in foreign investment in Vancouver’s residential market. Overall growth is having an impact on the commercial sector, however. The population in the North Shore is expected to grow by 45,000 by 2030, according to the District of Vancouver’s new community plan.
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