Vancouver Investment Transaction Stats – Q1 2019
Vancouver Office Market Posts Solid Quarter While Other Sectors Lag
Q1 2019 registered a total of 322 property transactions over $1 million, representing a total value of $1.58 billion, a decrease of 49% compared to a year ago
VANCOUVER ‒ Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the results for commercial real estate investment in the Vancouver Market Area for Q1 2019. Q1 saw 322 sales transactions, totalling $1.58 billion, a 49% decrease from Q1 2018. Transaction volume in the first quarter of the year is the lowest in 18 quarters, since Q3 of 2014. The total number of transactions has also slowed from the pace of last year, a decline of 36% from Q1 2018.
Overall cap rates for the greater Vancouver area remained relatively stable in Q1 according to the Altus Group’s Investment Trends Survey. Office, retail and industrial each settled at 4.0%, while the apartment market is expected to decompress slightly to an overall average of 3.5%. Vancouver and Toronto remain the top preferred markets by investors in Canada.
(Vancouver Property Transactions – All Sectors by Quarter)
In the first quarter, the industrial sector declined to $228 million, a 54% decrease from an all-time investment high in Q4 2018. Overall, 49 transactions took place, down from 70 in the previous quarter, and a 7.5% decrease from the same quarter last year. The most notable transaction that occurred in Q1 in the industrial sector was 2323 Quebec Street acquired for $38,000,000 by TPMG Capital, a local private investor. A lack of available industrial product remains a significant contributor to the dearth of transactions within the sector. With vacancy rates at all time lows, values remained strong as the average price per square foot increased by 5% over the quarter, to $399. Strata property sales made up 49% of the transactions in the industrial sector, and 20% of investment, representing $47.8 million in total.
The retail sector experienced its second consecutive decrease in overall investment in Q1 2019. Q1 recorded 35 transactions worth $136 million, down 47% in dollar volume from the previous quarter, and down 78% from Q1 2018. Q1 2013 marks the last time deal velocity fell below 35 transactions for a quarter and the last time overall investment was below $135 million for a quarter.
Despite a two quarter slide, respondents to the Altus Group Investment Trends Survey indicated that retail cap rates had experienced slight decompression thus far in 2019 and are now projected to remain steady.
Vancouver’s only net positive sector was the office market with 26 deals in the first quarter, up from 16 transactions in the previous quarter, and 13 in Q1 2018. Two suburban office transactions accounted for approximately $303 million of the $395 million traded in the office market, which vaulted the sector by 639% from the previous quarter and 221% year-over-year.
- Airport Executive Park, Richmond, acquired by Fiera Properties for $208,000,000
- Metrotown Place I & III, Burnaby, acquired by Slate Asset Management $95,000,000
This was the strongest quarter for Vancouver’s office market since Q1 2017 (by dollar volume), driven by key transactions as well as new, centrally-located, high-end strata projects like 34IW7, located in the Mount Pleasant area on West 7th Avenue, Vancouver. The increase in transaction volume is expected to continue as more strata office projects within this transition area are completed. The units appear to be predominantly acquired by local private investors and end-users.
(Q1 2019 Vancouver Property Transactions – Total Dollar Volume by Sector)
Residential land dipped under the $1 billion mark for the first time in 13 quarters to $446 million representing the sector’s lowest dollar volume output since Q2 2014. This is a decrease of 68% in dollar volume from the previous quarter and 66% year-over-year. Transaction volume witnessed a drop of 35% from Q4 2018 and 53% from the same quarter last year. Typically Greater Vancouver’s strongest performing sector, the marked decrease in sales volume and transactions had the most significant impact on the quarter’s overall performance.
“The lowest transaction volume since Q1 2013 is reflective of the gap between vendor and purchaser price expectations, the lack of product and has resulted in decreased market activity,” noted Paul Richter, Director, Data Solutions at Altus Group.
ABOUT DATA SOLUTIONS
Data Solutions connects the Canadian real estate industry through the delivery of data with unparalleled breadth, integrity and relevance. We cover new homes, investment transactions and commercial market inventory in key markets, and also provide intelligence on the national housing market and consumer home buying and borrowing patterns.
Our solutions are used by real estate industry stakeholders to gain market intelligence, identify and validate opportunities, benchmark, strategically plan, manage risk and more.
Data Solutions is part of Altus Analytics, the software and data solutions business of Altus Group, where our focus is to empower real estate clients and partners to work collaboratively to enhance decision making, drive performance and optimize transactional efficiency. Our solutions enable firms to better organize and manage data and connect with the right information and analytics to help them gain a complete picture of real estate assets, portfolios and transactions.
For more information on Data Solutions, please visit www.altusgroup.com/datasolutions.
ABOUT ALTUS GROUP LIMITED
Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Expert Services, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,500 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include some of the world’s largest real estate industry participants across a variety of sectors. Altus Group pays a quarterly dividend of $0.15 per share and our shares are traded on the TSX under the symbol AIF.
For more information on Altus Group, please visit: www.altusgroup.com.
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