A shiny new – and totally empty – office tower is proving an anvil-like weight on the New Westminster commercial market. Built on speculation by the City of New Westminster and sold to investors a year ago, the 14-storey tower has failed to attract a single tenant.
The 137,000 square feet of vacant space in the Anvil Centre, now owned by CRS Group of Companies and Joseph Segal of Kingswood Capital Corporation, has driven the New Westminster office sector into negative territory for the first time in 10 years and the vacancy rate to the second-highest level in Metro Vancouver.
The city’s office vacancy rate is now 16.8% and more than a quarter of Class A space in the Royal City is dark, according to an Avison Young survey.
Suki Sekhon, CEO of CRS Group, confirmed that no office tenants have yet signed, but that “interest has been very good.” The biggest office building in New Westminster, Anvil Centre is situated next to a SkyTrain station in the city’s core.
Sekhon said the owners have always known it was going to be a one-or two-year run to get most of the building filled with tenants. “This is a long-term vision,” he said. “This is something we want to get leased up with a quality tenant. You don’t want to put in tenants for the sake of putting them in. We prefer to have a good tenant mix there.”
A rapid lease-up, in fact, would trigger payments to the city of New Westminster, which sold the tower for $35.5 million. Under the terms of the sale, the purchasers are paying in installments. After putting down a $5 million non-refundable deposit upon signing the purchase and sale agreement, the purchasers provided an additional $5 million in December 2014, when the sale closed (and held back another $1.5 million until some construction deficiencies are addressed.) The remaining money will be paid to the city, with interest, within three years of the December 31, 2014 closing date.
If the building reached substantial leasing levels before the final installment is due, the city will receive earlier payments on the $25.5 million still owed, explained New Westminster mayor Jonathan Cote.
Sekhon said CRS has also looked at selling rather than leasing office space in the Anvil Centre. “ The building has been set up as a strata of two units per floor but it is our intention to lease the building at this time,” he said.
The city was originally working with the Uptown Property Group on the office tower, but after it pulled out of the project the city decided to build it on its own.
The Anvil Centre cost the city $41.5 million to build, but the city retained ownership of the first four floors, which is now a civic community centre.
“The City is not looking for more office space,” Cote said, who described the Anvil Centre sale as “a good deal for New Westminster taxpayers.”
