Retail, industrial and office product in demand as tight supply and low
cost of debt fuel active market
VANCOUVER, May 9 /CNW/ - Acquiring North Shore commercial real estate is
shaping up to be one of the hottest property investment plays of 2011.
The low cost of debt and a tight supply of quality inventory combined
with the region's affluence, proximity to downtown Vancouver, and
geographical land constraints have made the North Shore commercial real
estate classes - industrial, office and retail - attractive to public
and private investors and developers alike.
These are some of the key trends noted in Avison Young's Spring 2011 North Shore, BC Commercial Real Estate Market Report, released today.
"After almost two years of challenges in our market we are pleased to
see evidence of the turn-around," comments Avison Young Principal Terry Thies. "Both investor and business confidence is on the rise, leasing
activity has started to increase, and deal velocity is up."
Thies says he expects lease rates to stabilize through 2011 and property
values to remain strong.
"New developments on the North Shore combined with current vacancies
will provide businesses with excellent leasing options and strata
Retail property investment recorded a 460% increase between 2009 and
2010, climbing from $17 million in 2009 to $93 million in 2010, according to RealNet Canada. About half of that is derived from the $47 million purchase price paid for 845 Marine Drive in North Vancouver. Overall
retail deal volume climbed to 23 transactions in 2010 from 16 the year
Strata projects remain a hot commodity on the North Shore where a
constrained inventory of new office product keeps local business owners
aware of the benefit of making mortgage rather than lease payments. In
2010, dollar and deal volumes for office investment on the North Shore
($26 million/16 transactions) remained consistent with 2009 levels ($29
"We are experiencing a significant increase in activity," says Matt Thomas, an Avison Young associate specializing in North Shore commercial real
estate sales and leasing. "The office market, which was slow for the
past year, has picked up considerably. Sublease product that was
sitting on the market is starting to move."
North Shore industrial lease rates remain among the highest in Metro
Vancouver, ranging between $9 and $14 net psf, and certain developers
are acquiring older industrial buildings to stratify and sell off, or
to redevelop. Industrial lease rates are expected to remain steady
although more owner-users are likely to consider purchasing their
property as prices stabilize - not decline - and public and private
investors gain a better understanding of the market fundamentals
"The outlook for leasing on the North Shore is positive, with activity
increasing across all property segments," says Avison Young associate Ian Whitchelo. "While the past 16 to 18 months have been slow, during the first
quarter of this year we saw leasing activity start to pick up and
expect it to continue improving through the balance of 2011."
Thies and Whitchelo joined Avison Young in Vancouver in March, doubling
the size of the office's North Shore commercial real estate team.
"Now as the largest North Shore commercial real estate team, we can meet
and exceed market expectations and serve our clients even better," adds
Thomas. "The North Shore may not be a major market compared to
Vancouver, but there is a need for quality real estate services on the
part of the sophisticated ownership group."
Overall, cap rates for North Shore commercial real estate will trend
between 4% and 6.5% in 2011. Quality products without development
potential or below-market rents are achieving between 5.5% and 6%.
Those properties achieving cap rates 4% or lower are likely in areas
where redevelopment is envisioned by North Shore municipalities.
"Developers from all over Metro Vancouver want to be on the North Shore
and they are willing to pay the required premium to be there," adds
Avison Young's Spring 2011 North Shore Commercial Real Estate Report also features an in-depth look at the District of North Vancouver's new official community plan, Identity DNV 2030.
Founded in 1978, Avison Young is Canada's largest independently-owned commercial real estate services
company and the only national, Canadian-owned, principal-managed real
estate brokerage firm in the country. Headquartered in Toronto, Ontario
and ranked among Canada's leading national commercial real estate
organizations, Avison Young is a full-service commercial real estate
company comprising more than 700 real estate professionals in 23
offices across Canada and in the U.S. The company provides value-added,
client-centric investment sales, leasing, advisory, management,
financing and mortgage placement services to owners and occupiers of
office, retail, industrial and multi-residential properties.
∙ Please click on link to view Avison Young's Spring 2011 North Shore, BC Commercial Real Estate Market Report: http://www.avisonyoung.com/library/pdf/Van_Research/NVNewsSpring2011web.pdf
SOURCE Avison Young (Canada) Inc.
For further information:
For further information/comment/photos:
- Andrew Petrozzi, Research Manager, Vancouver, Avison Young: (604) 646-8392
- Terry Thies, Principal, Avison Young: (604) 646-8398
- Ian Whitchelo, Associate, Avison Young: (604) 647-6095
- Matt Thomas, Associate, Avison Young: (604) 646-8383
- Sherry Quan, National Director of Communications & Media Relations, Avison Young:
(604) 647-5098 or cell: (604) 726-0959
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