Office condos could become Metro Vancouver’s next hot strata sector, according to industry studies that point to $280 million worth of sales in the last two years. Some office condos are even selling for more than their residential comparative, noted Vancouver appraiser Brady Fluegel who believes the Broadway Corridor appears ripe for such developments.
Last year, office strata sales totaled $120 million, double the sales volume of five years earlier, according to Colliers International. Sales in 2015 were down from the peak seen in 2014, when $160 million worth of office condos were sold. But Colliers said the reduction was due to a lack of supply, not a cooling of demand.
The typical strata office buyer has traditionally been a small professional services firm or self-employed entrepreneur, often a doctor, seeking to benefit from real estate appreciation by owning rather than leasing their workspace.
Yet, when Serracan Properties Ltd. asked Colliers to find an occupant for its nine-storey office tower at 510 Seymour, Colliers’ Murray Dubuque fielded “an enormous number” of requests from people looking for strata office space – which made him wonder, is there a market for an all-strata-titled office tower?
Jeff Lim, vice-president, leasing, with Bentall Kennedy LP, suggests that strata demand is poised to surge, partly due to offshore demand. “I don’t know if the traditional accounting firm, law firm, 4,000 square feet, wants to buy real estate, but guys coming from mainland China, for whatever purpose, [it’s] obviously strata.”
“While the media is focusing on residential appreciation, strata office in some locations is quietly outperforming the strata apartment market,” noted
Fluegel, a principal with Burgess, Cawley, Sullivan and Associates.
An example, he said is Broadway Central, a Cambie Street strata office project by Orca West that sold out 127 units in 2014 at an average of $922 per square foot. At the same time, new residential condos right across the street were selling for $710 per square foot, Fluegel said.
According to Fluegel, West Broadway between Cambie Street and Oak Street, is “ideal for office strata” because of a SkyTrain station and proximity to the Vancouver General Hospital. The medical community is among the largest buyers of strata office space.
“I expect that some of the 10 future office projects within Vancouver’s downtown core will also consider stratification,” Fluegel said.