By Curtis Taylor, Senior Analyst & Erika Siegert, Senior Analyst, National Research Insights | December 11, 2020

The third quarter has offered more insight into the effects of the COVID-19 pandemic on the Vancouver commercial real estate market. With continued uncertainties amid the second wave of rising case numbers, investment activity has slowed. A total of 343 transactions, worth $1.5 billion were recorded in Q3 2020, bringing the year-to-date total to $5.6 billion. Year-to-date investment volume is down 22% when compared to the first three quarters of 2019. While activity in Q3 2020 shows the lowest totals on record since Q2 2014, certain asset classes still showed signs of life, demonstrating some optimism heading into the final quarter.

Vancouver property transactions all sectors by year Q3 2020

Industrial was the highest performing sector over the first three quarters this year, with just under $1.2 billion in transactions representing 21% of total investment volume. Investor interest in the industrial and multi-family sectors also remains strongboth with yeartodate volume increasing almost 16% compared to last year. The retail sector has shown resiliency despite rising challenges through the pandemic, with year-to-date volume reaching $650 million, up nearly 8% from last year. The third quarter of 2020 also saw an increase of 59% compared to Q3 2019. The office sector showed the greatest decline across all asset classes; down 66% compared to the first three quarters of 2019, and down 72% from Q3 of 2019. The $47 million in transactions in Q3 2020 represents the lowest total dollar volume seen in this sector since the beginning of 2010, resulting from the absence of any benchmark deals as the majority of office transactions were strata deals this quarter. Residential land has also taken a significant hit in 2020, with year-to-date totals down by 24% compared to 2019 as many developers in the current climate appear more comfortable holding cash than they do development land.

Altus Group’s Q3 2020 Investment Trends Survey has indicated little change in overall Vancouver cap rates from the previous quarter, although rates have increased slightly since the same time last year across sectors. Despite experiencing a drop in momentum this quarter, Vancouver remains on the positive side of the buy/sell ratio and sits among the top three markets preferred by investors. 

Vancouver overall capitalization rates Q1 2005 - Q3 2020

Notable Q3 Vancouver investment transactions:

Plaza 500, Vancouver – Apartment
Across all sectors the most notable transaction in Q3 2020 was in the apartment sector, with the $82,500,000 vesting order sale of Plaza 500, a 17-storey, 118unit concrete high-rise apartment located on the corner of West 12th Avenue and Cambie Street in the City of Vancouver. The site has infill potential which has contributed to the overall value of the property. The property also benefits from its location, sitting two blocks south of the Broadway-City Hall Canada Line Station, which will also connect with the Skytrain’s Millenium Line Broadway Extension, set to open in 2025. 

Trenant Park Square, Delta – Retail
The most notable retail transaction of the quarter was the sale of Trenant Park Square, a multi tenanted community shopping centre in Delta, British Columbia. Located at 5201 Ladner Trunk Road, the property was purchased by Keltic Canada Developments for a total consideration of $64,500,000, representing a price per square foot of $465. At the time of closing the property was reported to have an occupancy rate of 98.3%. The transaction was brokered by the National Retail Investment Group at Jones Lang LaSalle, with a reported year one yield of 4.6%.

1725 Coast Meridian Road, Port Coquitlam – Industrial
The largest industrial transaction this quarter was the sale of 1725 Coast Meridian Road, a 212,777 square foot warehouse and distribution centre located in Port Coquitlam, British Columbia. The property was sold by Northern Gold Foods to the Conwest Group of Companies in a share sale transaction for a reported price of $51,300,000, representing a price per square foot of $241. Subsequent to the date of sale, the vendor entered into a sale leaseback agreement with the purchaser for approximately 81% of the building. 

495 West 41st Avenue, Vancouver – Residential Land
The largest transaction this quarter in the residential land sector was the sale of 495 West 41st Avenue, a highdensity development site on the northeast corner of West 41st Street and Cambie Avenue in the Oakridge community of Vancouver. The former Esso gas station site was acquired by the PCI Group for a total consideration of $40,000,000, making this transaction the largest Residential Land deal in the quarter. The total price reflects a price per square foot of $2,528. 

473 & 475 West Hastings Street; 398 Richards Street, Vancouver – ICI Land
The largest transaction in the ICI land sector was the sale of 475 West Hastings Street, a redevelopment site located in the Gastown District of Downtown Vancouver. Currently improved with a two-storey multi tenanted retail building, the 0.215acre site was purchased by a private investor for a total consideration of $31,250,000. The deal was brokered by Don Mussenden and Arash Rezai at Lee & Associates, and it was reported that the purchaser has plans to redevelop the site. 

Vancouver property transactions by asset class Q3 YTD 2019 vs Q3 YTD 2020

After the gradual reopening of the economy over the summer, rising COVID-19 cases towards the end of Q3 2020 led to more restrictive measures across the city, and with it remained a hesitance amongst investors. With some asset classes showing resilience in the Vancouver market, including industrial and multi-family, there is hope for a strong finish to what has been an unprecedented year. 


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