The sum involved in a just-concluded office sale in Vancouver has pushed the city’s commercial property segment towards a direction that has left industry observers bewildered with its pace.
In early November, the 30-storey Waterfront Centre by Bosa Development sold out in a week for over $2,000 per square foot. The firm noted in a statement that the price point was brought about by the “uniqueness” of the building, which is scheduled to fully open by 2021.
“When you have a AAA office building at a prime location directly across from the transit hub for Metro Vancouver, waterfront views, world-class architecture and amenities — the project and demand for it are truly unique in the market,” Bosa Development executive vice president Richard Weir said, as quoted by CBC News.
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For comparison, data from Colliers Canada showed that the average price per square foot for commercial real estate in Vancouver is $830. This figure is already approaching that of the average per square foot for a condo ($1,023), per October statistics from the Real Estate Board of Greater Vancouver.
CBRE Limited senior vice president Aaron Ulinder noted that the valuation of Bosa’s sale should not come as a surprise since it is classified as a top-tier “AAA” class building – that is, the newest and largest buildings in any given market, furnished with cream-of-the-crop amenities and operational systems.
“The closest comparable sale I’m aware of was the top floor of Terminal City Club's office tower ... at $1,328.00 per square foot in December of 2015,” Ulinder said.
The executive added that the other major factor that might have affected the sale is the level of demand in downtown Vancouver, where the overall vacancy rate for premium office space is less than 3%.
“There are only a handful of opportunities in the entire downtown core that could accommodate a tenancy greater than 20,000 square feet,” he said.
Ulinder emphasized, however, that even for the standards of AAA-class structures, the Waterfront Centre’s sale price was “unexpected”.
Bosa Development retained control of the top 15 floors for future leasing. Bosa representatives have yet to disclose the identity of the buyers, but said that one entity has purchased an entire floor.
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