The value of B.C.’s commercial real estate transactions dropped to $1.483 billion in 2011, down from the record-setting $1.946 billion of 2010, according to a report released this morning from commercial real-estate services company Avison Young.
Also in 2011, commercial real-estate transactions dropped to 85 from 99 in 2010, according to the company’s year-end 2011 BC Real Estate Investment Review report.
The report found that a shortage of investment-grade real estate in B.C. restricted potential deal velocity and dollar volume of B.C. deals.
Michael Keenan, principal and managing director of Avison Young’s Vancouver office, said that all areas of commercial real estate are undersupplied, but that a key area of note is the retail market – everything from storefronts to shopping centres.
“There’s been a greater level of demand in the retail [market],” he said.
“What’s happened is, as the urban Metro Vancouver market supplies have become so constrained, the investing public has had to look to other markets, the much more outlying areas and the areas up in the Interior, and throughout the Okanagan and beyond – to the secondary and tertiary markets, in order to be able to satiate the demand, because it’s just not available [in Metro Vancouver].”
Keenan said he expects that supply shortage to drive expansions of Metro Vancouver shopping centres and densifying of retail opportunities in the downtown core.
“We’re going to see a flight to second-floor retail [in downtown Vancouver],” he said.
“There’s going to be a movement away from the old-fashioned single tenant retail to multi-level and that sort of thing, to make up for [the supply shortage].”
In terms of predictions for the coming year, Keenan said, “There’s no sign of letting up the demand.
“I suspect that we’ll see a little bit more supply come to the market in certain areas, probably more office than in the past.”
