The first speculative developers on Vancouver’s False Creek Flats might be the last to see land prices at less than $500 per square foot.
The 1,100 acres roughly bounded by Main Street, Prior Street, Knight Street and Great Northern Way are zoned for industrial and commercial use. Only a tiny amount is set aside for residential, mostly to accommodate students at the new Emily Carr University of Art & Design.
The zoning was expected to shelter commercial developers from the soaring land prices that characterize city neighbourhoods that have a potential for high-density residential.
But that is changing.
False Creek land zoned for industrial and light industrial use rose in price by at least 48% in the past year, according to a study by Andy Yan, director of Simon Fraser University’s city program.
In many cases, land prices have doubled.
“Our clients got in ahead of it,” said Blair Quinn, executive vice-president with the high-technology group at CBRE Ltd.
His clients, PCI Developments and Low Tide Properties, bought 565 Great Northern Way, a 1.85-acre site in the Flats, in 2016 for $34.6 million, or $430 per square foot. BC Assessment now values the site at $72.1 million.
PCI and Low Tide plan to build a 160,000-square-foot, seven-storey office building, with Class A space aimed at the city’s burgeoning tech industry.
It is the first multi-tenant office building in the area in 18 years, and the first of more than 1.9 million square feet planned to be built in the Flats by this development team alone.
Quinn said take-up of the office tower, already 72% leased, has “surpassed all expectation.”
He did not release lease rates but said they would be lower than rates for Class A office space downtown, which averages north of $45 per square foot.
Current tenants include the land’s former owner, Finning International (TSX:FTT).
Finning, the world’s largest dealer of Caterpillar (NYSE:CAT) equipment, is moving its global headquarters from downtown Vancouver back to False Creek Flats, occupying 29,000 square feet in the new building.
Blackbird Interactive Game Studio will be leasing 29,000 square feet, with Spaces, a co-working space, leasing 39,000, and Samsung leasing 20,000 square feet. Quinn said PCI and Low Tide plan to start on a second phase of 300,000 square feet of commercial space at the site by mid-2019.