Capital dealings
The flurry of announcements and features recapping 2017 investment sales is a rite of spring, because all that information takes time to process. Depending on how the numbers are sliced, the transactions work out to an investment volume of $15.7 billion (Real Estate Board of Greater Vancouver), $14.2 billion (Altus Group, based on Metro Vancouver sales of $1 million and up), or $7.5 billion—the province-wide tally reported by Avison Young, which tracks deals $5 million and up.
While the Avison Young tally looks small for a province-wide figure, it represents an 83% increase over the comparable tally for last year. It indicates that big deals were on the increase, while the two tallies including deals less than $5 million rose at rates in the mid-teens.
While a shortage of available assets helped drive price increases in Metro Vancouver, the strength of demand flowed into smaller markets.
Avison Young reports that Victoria saw its largest-ever office transaction, the November purchase of Sussex Place for $131.5 million by Quebec’s Industrial Alliance Insurance and Financial Services Inc. The sale reflected historic highs across the province for office pricing, a function of what proved to be a record year for office investment.
Press reset
While landlords might be paying top dollar to acquire properties with stable cash flow, tenants don’t necessarily want to ante up.
This is playing out two ways in Victoria: one, a growing number of companies from Vancouver are looking for space in the city because it’s cheaper than in the Lower Mainland; and two, companies with established operations in downtown Victoria are seeking cheaper digs farther out from the core.
One opportunity that’s being renovated to meet the need is the Victoria Times-Colonist building at 2621 Douglas Street, which Merchant House Capital Inc. bought late last summer in an off-market transaction (the sale price is not disclosed). With a total density of 270,000 square feet possible, the property is being positioned as a dynamic, creative space offering the large floor plates and high ceilings beloved of co-working space providers and de rigueur amenities such as craft breweries and distilleries.
Situated in the Victoria area known as Midtown what local planners have designated the Humber Green Urban Village, the site also has potential for residential development.
“There’s lots of different tenants from the core that are also evaluating the move to Midtown given that is an area that will be transforming,” said Ross Marshall, vice-president with the investment properties group in the Victoria office of CBRE Ltd. “The high-tech community both locally and from Vancouver is looking at this as a tremendous opportunity.”
Victoria doesn’t just offer a lower cost of living; Marshall says the cost of a funky B-class building is not only cheaper than a premium site closer to the core, but also 25% less than in Vancouver. And, there’s parking—something in short supply in the core.
“Given the appetite for prime development sites downtown and the lack of sites in the core now, developers and investors are starting to look just north of the city for opportunities,” he said. “It’s inevitable that we’re going to see more and more of these sites trading and then being repurposed.”
A decade later
The changes planned for the Times-Colonist property recalled hopes for the historic Bay department store at Douglas and Fisgard streets, which Townline Group acquired in 2004. Plans called for 145 loft-style homes above 45,000 square feet of retail space, an area now home to the Victoria Public Market.
Many market merchants participate in the Food Eco District, a restaurant-driven initiative designed to brand the area as a sustainable destination. It’s a far cry from the 1,500 needles that accumulated in the store’s parkade over a six-month period in 2006, making it “not a part of Victoria that people feel comfortable going,” Townline president Rick Ilich said at the time.
A decade later and eight blocks north, Midtown’s next.
