Partners sought for Flamingo Hotel redevelopment in Surrey

 

Flamingo dance

Tien Sher Group is drafting a new chapter in the redevelopment of Surrey’s storied Flamingo Hotel.

A month ago, Avison Young principals Bal Atwal and Mehdi Shokri circulated a brochure inviting interest in the four-acre site. Billed as an “exclusive development opportunity,” the project could have up to 965,000 square feet of space in three residential towers and approximately 52,000 square feet of commercial space.

But the offering isn’t aimed at divesting himself of the property, explained Tien Sher president Charan Sethi. Rather, he’s seeking a joint venture partner to see the project through to completion.

“The reason I put it on the market is because we’ve been looking for somebody to partner up with,” he said. “This is the only way to smoke out people who are interested in that area.”

A month later, work continues to find a partner, but progress is in sight. Among the potential partners are companies that could use the low-rise portion of the development for office space and be within reach of affordable housing in the highrise portion.

No further details are forthcoming, pending the conclusion of a deal. There is no timeline for the outcome of negotiations.

Redevelopment of the Flamingo property is pegged at $170 million. This is more than thrice the value of real estate Tien Sher sold at its Maverick project in mid-May. With 125 units on five floors, buyers committed to $55 million worth of real estate in seven hours.

Strata rising

PC Urban Properties Corp. is counting on record pricing for industrial strata space continuing as it prepares to launch a new development in Burnaby.

Continuing its IntraUrban brand of strata developments, PC Urban last week announced a new 100,000-square-foot project in Burnaby’s Brentwood area. The project is billed as the area’s first industrial strata project in more than 20 years, a fact that testifies to its transformation from industrial and commercial uses to what Shape Properties Corp. calls “the Amazing Brentwood.”

“Amazing” is also an appropriate term for the stratospheric rise in pricing for industrial strata space across the region, including Burnaby. Avison Young statistics point to a sharp increase in the city since 2015. Sales averaged $214 a square foot between 2008 and 2015 before leaping to $260 in 2016 and $316 last year. Sales this year have thus far averaged $376 a square foot.

PC Urban pegs the new space at $425 a square foot, with unit sizes starting at 2,700 square feet.

Similar to its three other Lower Mainland projects, not to mention its Enterprise project in Kelowna, IntraUrban Brentwood redevelops and densifies an older industrial property for a new generation.

While planners envision two million square feet of commercial space in the Brentwood area, more than a quarter of the area is designated for residential development. Approximately 50 acres are designated in the community plan for industrial space, meaning new, high-quality space will see solid demand.

“The long-term vision for this whole region is on an upward curve,” PC Urban principal Brent Sawchyn said in announcing the project.

Avison Young, for its part, expects strata pricing to moderate as a wave of new development is completed in the next 12 to 18 months.

However, its latest Metro Vancouver industrial market survey reports that overall demand for industrial space, including leased premises, is driving the strata market.

“Investors are acquiring units and then flipping them at a higher price, usually to owner-occupiers,” Avison Young reports, noting that rising borrowing costs aren’t reining in prices. “Slow but steady interest rate increases have yet to temper demand or slow rising prices for industrial assets.” •

pmitham@telus.net