Seasoned real estate developer Wesgroup “did everything backward” with its Brewery District in New Westminster, concedes company vice-president of corporate development David Wesik. But, judging from the results, other developers may reconsider how to structure and market their mixed-use projects.
Residential is now nearly mandatory with Metro Vancouver retail and office projects and the common strategy is to lead with the housing to create a critical mass of consumers to attract retail tenants.
When offices are included, the tradition is to bring it into the mix in the latter stages and to lease the space, rather than sell it as strata.
But at the Brewery District – named after the Labatt brewery that was once on the site – a 1.39-million-square-foot blend of offices, retail space and 750 housing units adjacent to New Westminster’s Sapperton SkyTrain station is different. Wesgroup led by attracting a large food store, then developing office space and then building out the retail without a single condominium even started.
The reverse strategy has apparently paid off. Virtually all of the 560,000 square feet of office space was snapped up. TransLink signed a 20-year lease on 261,000 square feet for its eight-storey headquarters, and a number of doctors and other medical professionals, drawn by the close proximity to Royal Columbia Hospital, bought office space for $468 to $685 per square foot. This compares to a Metro Vancouver average of $393 per square foot. A third office building was sold to the 17,000-member Health Science Association.
The retail was equally well received. According to Wesik, only 1,300 square feet of the 68,000 square feet remains vacant, startling in the Sapperton area of the Royal City, where retail vacancies are traditionally above 11%. Anchor tenants at the Brewery include Save-On-Foods, TD Bank and Shoppers Drug Mart, but there is also a Starbucks and a Browns Social House. A yoga studio is opening soon. The net retail lease rate is $35 per square foot, similar to Vancouver’s Gastown or West Fourth Avenue.
Wesik credits a unique location and an “underserved” neighbourhood more than marketing genius for the Brewery’s commercial success. “It was a risk,” Wesik said. “Traditionally the residential would have been first out of the gate. But it was a strategic decision on our part to lead with the office and retail to build up the amenities in this area.”
With the TransLink headquarters, the medical offices and the retail, the Brewery has become a major employment hub in New Westminster with more than 2,300 daily workers, Wesik said. “That will now propel the housing sales. We have done it all backwards, but it’s worked out.”
The first of four condominium towers at the Brewery is expected to come to market this March, Wesik said.