According to plan
Metro Vancouver is making good on its plans not to be a landlord when it vacates its current premises at 4330 Kingsway and 5945 Kathleen Avenue in Burnaby later this year. The regional district listed its properties with CBRE Ltd. last week, hoping to have the properties sold soon after it moves its staff to Metrotower III in late October.
“We think the market is going to be strong,” said Randy Wenger, division manager, properties, with Metro Vancouver. “We think it will be relatively quick, but until the offers start coming in it’s difficult to say. We’re hoping that we can close a transaction by the end of this year.”
CBRE Ltd. vice-chairman Tony Quattrin, who with Jim Szabo is handling the listing, said the properties have many advantages, including ongoing holding income and future redevelopment potential.
Tenant demand is strong. Colliers International reports that Burnaby office vacancies have fallen to 6.9% in the second quarter from 12.3% a year ago. Quattrin said land values are even stronger, thanks to Burnaby’s recent approval of the Metrotown Downtown Plan. The plan allows up to 742,000 square feet of development on the 1.6 acres Metro Vancouver is vacating, nearly triple the existing 250,000 square feet. This results in land that’s “almost worth more than the office building.”
“It’s a good site,” Quattrin said. “I think it will get a lot of interest.”
The properties’ divestment was part of Metro Vancouver’s long-term plan. Speaking in January 2016, shortly after acquiring Metrotower III from Ivanhoé Cambridge, Metro Vancouver said it wasn’t interested in becoming a landlord at its old digs.
“That’s not our core business,” Wenger reiterated last week. “These properties will be surplus, so we’re selling them to get the money to help pay for the building we purchased.”
Metrotower III has tenants in the space Metro Vancouver isn’t occupying, including Stantec Consulting Ltd., Hemmera Envirochem Ltd. and London Life Insurance Co. However, Wenger said the tenancies were part of the tower’s acquisition, and rents “help pay the bills.”
Metro Vancouver bought Metrotower III for $205 million. Conveniently located near its old premises, the building offered a chance to streamline its space requirements. Its employees will occupy more than 220,000 square feet in the building, which totals 414,000 square feet. Approximately 32,000 square feet remains available for lease.
An ownership transition is in the works for The Hub at 2460 Commercial Drive, which most transit users know as the two buildings flanking the entrance to the gritty and much-trafficked Broadway-Commercial Drive SkyTrain station.
Personal reasons among the ownership group of five local investors prompted the property’s listing with Avison Young earlier this year. Jake Luft, a senior associate with Avison Young who’s handling the listing, said the property attracted “numerous submissions” by the bid date of June 15.
“We had a lot of interest. We still have a lot of interest in that site,” he said last week.
While negotiations have yet to yield a firm deal, the ownership group’s circumstances mean it can afford to be patient, waiting for the right opportunity to come along. Luft consequently refused to speculate on how fast a deal for the property might come together.
With the range of development taking place in the surrounding area, including proposals by Westbank Corp., Intracorp Projects Ltd. and Jameson Group, the 0.67-acre site is well suited to densification. The two existing buildings, built as part of TransLink’s early efforts to increase retail (and revenue-generating) space at transit hubs, have a leasable area of 19,515 square feet. Tenants include Shoppers Drug Mart, several medical offices, Blenz and other fast-food outlets.
“This is the busiest transit hub in the province,” Luft said, “so there will be redevelopment potential here at some point.” •