North Shore’s commercial market sees slowest year since 2009

Last year marked the first time that commercial real estate investment in North Shore, BC did not exceed $100 million on an annual basis since 2009, according to the latest research by Avison Young.

The market’s commercial volume – which includes industrial, retail, and office assets – dramatically plummeted from $258 million in 2017 to $87 million in 2018. This was despite robust development and construction activity.

Industrial assets have seen particularly strong demand, with the sector labouring under an extreme 0.5% vacancy rate as of the end of Q1 2019. Any new industrial space that does enter the market has been leased almost immediately.

“There are virtually no industrial properties suitable for owner-occupiers available for sale while there are a handful of occupied industrial properties available for sale on an investment basis,” Avison Young explained.

“While industrial lease rates have increased significantly over the past five years and averaged $16.55 psf at the end of the first quarter of 2019, rates finally appear to be levelling off.”

Similarly inflamed demand also applied enormous downward pressure upon strata office and retail space vacancies.

“Office vacancy on the North Shore, which was 10.3% at the end of 2018, has tightened in 2019 as steady leasing activity continued in most of the North Shore’s office nodes. Class A rates have averaged $28.50 psf and absorption will likely remain stable in 2019.”

In fact, strata units represented a clear majority of 2018 sales, with large-scale freestanding properties seeing far less prominence.

“Commercial real estate sales activity in the first quarter of 2019 remained muted with office, retail and industrial deals totalling slightly more than $20 million as investors and owner-occupiers alike struggled to secure and execute on the investment opportunities that have arisen,” Avison Young stated.

“Sale and lease options for office, industrial and retail properties remain highly limited on the North Shore as vacancy remains tight and pricing strong in all asset classes. Development sites, particularly for mixed-use developments, also remain in high demand and short supply.”

 

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