A land rush in Metro Vancouver pushed investment sales to nearly $5 billion in 2022’s first quarter, a 60 per cent increase over last year as buyers scrambled to claim anything that was available.
“Investors were looking to get their hands on land,” said Andrew Petrozzi, a director with national market intelligence firm Altus Group overseeing commercial research in Western Canada.
A total of $4.9 billion worth of properties changed hands in 733 deals in the first quarter versus $3 billion a year earlier, Altus Group reported. Close to 54 per cent of sales by value were land deals, representing half of all transactions.
The top deal was the sale of an 8.3-acre site at Dawson Street and Willingdon Avenue in Burnaby’s Brentwood neighbourhood by Aoyuan Property Group, the Canadian subsidiary of China’s Aoyuan International.
Anthem Properties Group and KingSett Capital closed on the site in March for $215 million, picking up a mixed-use development approved for 2,100 condos, 340 rental units and 60,000 square feet of new retail and office space.
The momentum behind land sales has remained strong in the second quarter, Petrozzi added.
While the numbers haven’t been crunched, one of the larger land deals will likely be Grosvenor’s recent purchase of the former Oakridge transit centre from MOMC Canada. A purchase price for the deal, which took place through a share transfer, was not disclosed. However, the property sold in 2016 for $440 million.
Several industrial sites have also traded at record pricing during the second quarter, building on what Petrozzi said was a record start to the year.
The first quarter saw $930.1 million in industrial sales across 163 transactions, the largest number of industrial sales ever recorded in a single quarter and surpassing the most recent high of 152 industrial sales set in fourth-quarter 2021.
“Pricing continued to rise through 2021 as the supply continued to grow more constrained,” Petrozzi noted.
“There are fewer assets, which is driving prices higher and demand remains undiminished.”
Altus figures indicate industrial deals had an average value of $5.7 million in the first quarter, up from $4.6 million a year earlier, a 24 per cent increase.
The intensity of the market is highlighted by the sale of a 22.6- acre industrial site in 80th Avenue in Delta’s Tilbury industrial area. Beedie Industrial paid $117 million – more than $5.1 million an acre – for the site in January 2022, beating out 13 other bidders for the privilege.
The conditions reflect both the unusual strength of the local land market, but also the equally unusual disruption the pandemic delivered.
“The past two years were not normal,” Petrozzi said. “You have basically 2020 and 2021 almost happening together, to some extent. There was this pent-up demand, which is why you see these heightened rates, particularly towards the end of ’21, and some of that is cascading into the first quarter of 2022 as well.”
The momentum should keep going through the second half of the year, despite concerns over the headwinds posed by rising interest rates and concerns about layoffs at major tech companies.
“We have yet to see the impact of interest rates or inflation on sales yet. That likely we won’t see for another two to three quarters,” Petrozzi said.
The downtown office market illustrates the confidence. Allied Properties REIT paid $135 million for 1185 West Georgia Street, a 16-storey, 165,855-square foot office tower sold as part of a national six-building portfolio sale by Choice Properties REIT.
It was a vote of confidence in the market, followed by significant announcements by builders and tenants who continue to see value in office space. •