Retail transition
A chance run-in with a retailer along Broadway just west of Cambie Street a few weeks ago elicited a rant about how space was becoming too expensive for small mom-and-pop retailers like him to make a go of it. As he waved at the “for lease” signs posted by DTZ Barnicke and Cushman & Wakefield Ltd., this hapless columnist wondered if it had been really so wise asking whether the building was being readied for redevelopment.
Cushman & Wakefield broker Chris Newton, whose name was on one of the signs, said space in the area is indeed expensive, but the area’s transitional nature means the high rates are difficult to achieve even if lower rates aren’t justified.
Retail sales are under pressure. The latest estimates from Central 1 Credit Union peg growth at just 2.5% this year and 3.4% in 2012, and Colliers International reported that prevailing lease rates of $35 to $80 a square foot in the Broadway corridor west of Cambie were dropping this summer.
While new space at the Cambie-Broadway nexus hasn’t had trouble leasing up, older product to the west and especially east of Cambie has been challenged, even with the new development transforming both areas.
“You’ve got an area in transition,” Newton said. “The transit hub hasn’t necessarily translated into a lot of demand among retailers to be in that area to the east.”
With net rents maxing out at $35 a square foot for older space and property taxes and other expenses adding an additional $12 to $14 on top of those rates, smaller retailers balk.
“That’s a very expensive gross monthly rent,” Newton said. “The national tenants that are out there looking at great locations, they’re still willing to pay top dollar for those locations, so the market seems to support it. But it’s the moms and pops that have traditionally held up that area that are having difficulty.”
Sovereign ambitions
Tower height is always a talking point in real estate, and comes to the fore when people want to boast (or roast) the figure. Back in 2002, Shaw Tower set its sights on being the city’s tallest building at 489 feet, but Wall Centre, at 491 feet, occupies the highest point on the downtown peninsula. Yet even before Shaw Tower’s completion in 2004, the announcement of Living Shangri-La at 1128 West Georgia Street trumped all comers as the tallest building in B.C. at 646 feet.
The city’s move in 2009 to designate four sites for towers of up to 500 feet and prevent the kind of buzzcut Richmond’s downtown cityscape sports spurred more debate. And let’s not forget Rize Alliance Properties Ltd.’s contentious proposal for a 32, then 26, then 19-storey tower at Kingsway and East 10th Avenue in Mount Pleasant.
Out in the suburbs and east into the Interior, debates over height hinge on civic stature and shadow-casting. Meanwhile, local airspace was potentially threatened by an 81-storey project that former Surrey mayor Doug McCallum said Jung Ventures Inc. was planning for that city. The announcement was widely seen as McCallum voicing ambitions for Surrey prior to a civic election he lost to current mayor Dianne Watts, and Jung eventually met its Waterloo in 2008’s financial crisis.
Still, tower height has its appeal as Bosa Properties Inc. knows. It recently announced that its Sovereign tower in Burnaby will be the highest-rising building in Metro Vancouver (if not the tallest) thanks to its location.
Starting from an elevation of 412 feet above sea level, Sovereign will rise 485 feet, setting its roof 897 feet above sea level. Living Shangri-La, by contrast, is approximately 100 feet above sea level, and reaches just 746 feet above sea level.
Investment tips
The collapse of Lehman Bros. on September 15, 2008, definitively ushered in the worst financial crisis since the Great Depression, and three years later economic uncertainties continue to roil markets. The recession may be over officially, but that doesn’t mean everyone’s calm about investment prospects.
Just take the recent breakfast discussion at the commercial real estate association NAIOP, where panellists were asked what their investment picks were.
Andrew Tong, senior vice-president, investment with Concert Properties Ltd., favours what he knows, telling interrogator Tony Quattrin, executive vice-president with CB Richard Ellis, he’s focusing on real estate with good cash flow “only because I understand it.”
John Purcell, senior vice-president and portfolio manager with Bentall Kennedy (Canada) LP, chose commodities because of China’s stable growth.
But the punchline was left to Darren Latoski, president of Sunstone Realty Advisors Inc., who is doing what most of us would like to do: “I’m completely paranoid, and so I put my money only with myself. I put it in things that I can fire the fund manager.”
Correction
Contrary to a statement in last week’s Real Estate Round-up (issue 1145; October 4-10), Arirang House at 2211 Cambie Street is at the south end of the Cambie Street bridge. •
