The preponderance of yoga wear in chic young Kitsilano makes Lululemon Athletica’s recent purchase of the former Kvaerner Chemetics building at 1818 Cornwall Avenue a smart move.
The building stands at the gateway to Kitsilano, where the popular yoga apparel company got its start. Accessible for staff as well as an advertisement for the company, 1818 Cornwall gives Lululemon 138,600 square feet in a prominent location on key transit routes.
Lululemon paid $65 million for the property, which Bentall Kennedy LP was formerly priming for redevelopment. Lululemon has returned to the market the 50,000 square feet of space on Clark Drive where its offices were. It will now make its headquarters in 78,000 square feet of the new premises. Lululemon’s latest annual report notes that the offices on Cornwall “are sufficient for our expansion plans for the foreseeable future.”
According to the latest statistics from CB Richard Ellis, triple-A office space in downtown Vancouver is closing out 2011’s first quarter with the highest occupancy since late 1997.
While suburban vacancies remain high, with Burnaby, Richmond and New Westminster posting double-digit rates, downtown Vancouver vacancies have slipped to 4.4%. That’s down from a peak of 6% in September 2009 and comparable with levels two years ago.
“It’s not so much that people are still looking for the bottom,” said Anthio Yuen, senior research analyst in CB Richard Ellis’ Vancouver office. “[Vacancies] have more or less peaked.”
The decline is seen in triple-A-class space most acutely. Absorption in 2011’s first quarter has been about 63,150 square feet, in part because there is so little space to absorb. Vacancies in the class sit at 2.3%. This compares with vacancies of 1.8% in 2007’s third quarter, when absorption was limited to 55,000 square feet.
The circumstances are setting the stage for announcements of new office towers in the core. Telus in conjunction with Westbank Projects Corp. plans a new headquarters for Georgia Street, but Oxford Properties Group is tipped as making news shortly with its own plans for 260,000 square feet at 1021 West Hastings.
Regionally, Metro Vancouver office vacancies are ending the first quarter at 9.4%, with absorption just short of 225,000 square feet.
While digging up housing prices for various neighbourhoods recently, the numbers for Whistler stuck out. Remarkably, the rolling 12-month average for Whistler apartments came in at just $340,532, with the least expensive property being a trifling $80,000 for a studio. Sure, the high came in at $5.2 million, but $80,000? Tell me more.
A call to Drew Meredith, a veteran at the Whistler Real Estate Co., yielded some answers.
The last good year in Whistler was 2002, he said, as a profound slump hit in 2007. According to Meredith, sales till March 21, 2007, in Whistler totalled 178 and dropped to 160 the following year and just 65 in 2009. This year, sales crept back up to 99, but the low volume highlights the lack of activity that’s been keeping prices down.
“The Americans left the program – that’s our problem,” he said. “And the Brits, to a lesser degree, “[but] it’s the U.S. market that we’re missing, severely.”
Residential real estate prices have consequently dropped significantly.
“Prices have just been getting crunched down and crunched down. The deals are going down substantially off list price.”
Meredith added that Ecoasis Properties Ltd.’s purchase of Kadenwood from Intrawest earlier this year also affected the market because prospective buyers in the subdivision knew there was plenty of finished product available competing with the building lots.
“The lot inventory was continuing to climb, but most people were looking and saying, ‘Why would I build when I could buy existing product, of which there’s lots?’” Meredith said.
By the same token, commercial properties such as Whistler Marketplace Shopping Centre and the commercial portion of the Hilton development in Whistler sold last year. Vancouver-based Headwater Project Inc. acquired the former from Hospitals of Ontario Pension Plan last summer for approximately $50 million, Meredith said, while the latter is now being shopped around, having traded for approximately $30 million last year.
“There’s obviously a lot of good faith in what’s going to happen here.”