Developer Conwest left money on the table but company COO Ben Taddei has few regrets about the risk taken with the $14.5 million purchase of an old industrial site in East Vancouver three years ago.
Early this year, as city and company officials symbolically broke ground on the mixed-use Ironworks project, half of the floor space had already sold at $330 to $600 per square foot and Conwest was beating investors off with a stick.
The site, at 200 Victoria Drive just north of East Hastings Street, falls under a 2009 spot zoning initiative of the City of Vancouver that bonuses higher density for job-generating projects in East Vancouver.
The 2.3-acre site was awarded a 3 FSR (floor space ratio) that would have allowed Conwest to develop 300,000 square feet in the first stacked industrial and office project in the city.
“But we were conservative,” Taddei explains. “It was risky, so we went with 2 FSR, 200,000 square feet.”
Conwest Group of Companies, a Vancouver-based firm, quickly discovered there was pent-up demand for such strata commercial space from a wide range of local industrial and office tenants.
“If we knew then what we know now we definitely would have gone 3 [FSR],” Taddei says with a laugh. He adds that Ironworks attracted a great deal of interest from investors hoping to buy space and then lease it back to tenants, but Conwest strictly restricted sales to owner-occupiers of local companies. The formula has proven so successful that Conwest is now developing two similar strata projects, including one on Southwest Marine Drive in Vancouver.
When it completes in 2019, the block-big Ironworks will be composed of two buildings designed with ground-floor light industrial and warehouse space – complete with 26-foot-high ceilings and loading docks – and showrooms, with office space above. The buildings are divided into units that range from 3,000 square feet to 14,000 square feet and can cover multiple floors. The city’s light industrial zoning allows everything from grinding coffee to baking bread or creating video games.
An estimated 35 high-tech or service-oriented and professional businesses are projected to provide 500 permanent jobs at Ironworks when it opens.
Stacking strata office space has also proved popular in Vancouver’s Mount Pleasant neighbourhood, where city planners and astute developers are changing what was once a low-rent industrial zone.
Chard Development Ltd. is transforming a cinder-block warehouse in Mount Pleasant into a project set to complete in 2018. Situated at 34 West 7th Avenue, the former warehouse will become a four-storey commercial strata development.
The project will have 49,500 square feet of interior space plus 6,000 square feet of terraces that will include what Chard acquisitions officer Byron Chard terms an “outdoor boardroom.”
“We’re really trying to get the creative class to be in the area,” Chard says.
The vision is for units at grade to house light industrial users, with offices suitable for tech companies on the upper levels.
An exterior glass wall will let passersby see the kind of activities that make up the new cityscape.
“[It’s] taking the skin off of Mount Pleasant,” Chard says. “We’re really accenting it and showing the great companies that work there.”
Chard envisions 300 to 500 people employed on a site that formerly had just 10 employees.
The densification of job space is taking place in tandem with other local developments. Avison Young’s most recent office report enumerates a half-dozen commercial projects in Mount Pleasant, both strata and leased.
“Market activity [in Mount Pleasant] is anticipated to remain strong for the next six to 12 months,” Avison Young reports.
Mixed-use strata is not restricted to off-market neighbourhoods: in downtown Vancouver, Reliance Properties and Jim Pattison Developments included 90,000 square feet of strata office space in Burrard Place, where about 60 per cent of the space has been purchased, though it doesn’t complete for three years.