Commercial First Blog
Commercial real estate sales in the Lower Mainland declined in the first quarter (Q1) of 2019 compared to the active market experienced across the region last year.
There were 318 commercial real estate sales in the Lower Mainland in Q1 2019, a 42.1 per cent decrease over the 549 sales in Q1 2018, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).
The total dollar value of commercial real estate sales in the Lower Mainland was $1.531 billion in Q1 2019, a 57.3 per cent decrease from the $3.587 billion in Q1 2018.
“Much like we’ve seen in the residential market, there’s been reduced demand in the commercial real estate market through the first quarter of the year,” Ashley Smith, REBGV president said. “With housing inventory at a five-year high and more supply on the way, the development community appears to be taking a more cautious approach.
Q1 2019 activity by category
Land: There were 87 commercial land sales in Q1 2019, which is a 63.1 per cent decrease from the 236 land sales in Q1 2018. The dollar value of land sales was $709 million in Q1 2019, a 61.3 per cent decrease from $1.832 billion in Q1 2018.
Office and Retail: There were 131 office and retail sales in the Lower Mainland in Q1 2019, which is down 26.8 per cent from the 179 sales in Q1 2018. The dollar value of office and retail sales was $367 million in Q1 2019, a 72.6 per cent decrease from $1.339 billion in Q1 2018.
Industrial: There were 92 industrial land sales in the Lower Mainland in Q1 2019, which is down 20.7 per cent from the 116 sales in Q1 2018. The dollar value of industrial sales was $392 million in Q1 2019, a 35.1 per cent increase over $290 million in Q1 2018.
Multi-Family: There were eight multi-family land sales in the Lower Mainland in Q1 2019, which is down 55.6 per cent over the 18 sales in Q1 2018. The dollar value of multi-family sales was $62 million in Q1 2019, a 50.2 per cent decrease from $125 million in Q1 2018.
Land includes properties that are holding properties, farmland, garden centres, redevelopment sites, land assembly sites, vineyards, etc.
Office and Retail properties are defined by the zoning according to each municipality and must have a building on the site. This category includes: Office, office condo, retail, retail condo, shopping centre, gas station, car dealerships, banks, community centres, day care, educational facility, institutional, golf courses, movie theatre, hotel, churches, restaurants, truck stops and others.
Industrial properties are also defined by the zoning according to each municipality and must have a building on the site. This includes warehouses, warehouse bays and multi-bay warehouses.
Multi-Family properties include: nursing homes, high rises, low rises, and any condo or townhome properties containing four or more units with at least one zoned for commercial use.
Download the Q1 2019 commercial stats package
“While economic activity remained tepid at the start of 2019, a rebound in financial markets pushed the CLI higher,” says BCREA Deputy Chief Economist Brendon Ogmundson. “That signals a lower risk environment, but a slowing economy may impact future commercial real estate activity.”
Following several years of robust growth, the BC economy continues to slow in the early part of 2019. The economic activity component of the CLI posted a third consecutive quarterly decline. Employment in key commercial real estate sectors was mixed. The CLI measure of office employment now sits at an all-time high, which signals strong future demand for office space. Volatile financial markets led to recent swings in the underlying CLI index, but the trend remains flat, pointing to stable commercial activity in 2019.
To view the full BCREA Commercial Leading Indicator index, click here.
For more information, please contact:
Deputy Chief Economist
Real Estate Board of Greater Vancouver - Government Relations
Extending SkyTrain along the Broadway Corridor – the Millennium Line Broadway Extension – is a major priority for the City of Vancouver and TransLink’s Mayor’s Council on Regional Transportation.
But, Vancouver council is determined to avoid the type of price escalation speculators created by buying up land near proposed SkyTrain stations when the Cambie corridor expansion was announced.
While the city has begun drafting a Broadway plan, Vancouver council has adopted a new policy to curb speculation along the corridor which establishes development contribution expectations (DCEs).
In a letter to Phil Moore, Real Estate Board of Greater Vancouver president, Gil Kelley, Vancouver’s general manager of planning said: “This measure will ensure land owners, REALTORS® and developers are made aware of the city’s intention to achieve affordable housing and community benefits as part of the community plan for the area.”
Kelley explained in this letter that Vancouver has brought in DCEs to enable buyers to factor in the potential costs of providing amenities when rezoning or density bonusing occurs.
The new Broadway Plan
Broadway is a regionally important area that connects the largest university, University of British Columbia (UBC), and the largest hospital, Vancouver General Hospital, in Western Canada.
There are more than 125,000 residents within the corridor (including UBC) with a further 70,000 expected by 2045. With more than 105,000 jobs along the corridor (including UBC), Broadway is the second largest job centre in BC, and a major source of employment for residents throughout Metro Vancouver.
The new Broadway Plan is being drafted by city staff for the Broadway corridor which stretches from Commercial Drive to UBC.
The plan, expected to be completed in 2020 will focus on neighbourhoods along the Millennium Line expansion located in the area from Clark Drive west to Vine Street in Kitsilano (two blocks west of Arbutus) and from 1st Avenue to 16th Avenue.
The plan will address the need for:
Opportunities to have your say
There was a consultation session in May 2018 and there will be a consultation process beginning in early 2019. Realtors will be able to provide input including ideas and recommendations.
Read the staff report to Council (Opens 50-page pdf).
Areas specific DCE targets
Community planning area
DCE Target Area
Broadway Area Planning
C-2 Market residential strata
$3,552.09/ sq. m.
Broadway Area Planning
C-3A East of Main St. (Market residential strata)
Broadway Area Planning
C-3A West of Main St. (Market residential strata)
The DCE of $425 per square foot would add almost $297,500 to the cost of a 700-square-foot condo west of Main Street.
DCEs won’t be collected when land is bought or sold. The DCE is the amount expected for future redevelopments.
When the Broadway Plan is completed, DCEs will be reviewed and may be revised to reflect the densities, mix of uses and amenity needs in the planning area.
The DCEs will be updated and incorporated into the community amenity contribution (CACs) policy for the planning area.
Under the Rental Housing Stock Official Development Plan, there’s a requirement for a one for one replacement of rental units for new developments of three units or more.
Vancouver prioritizes job space along Broadway between Yukon and Oak, and no additional residential density will be considered in this area.
Development Contribution Expectations Policy (Opens a 6-page pdf)
The Broadway extension is expected to be completed in 2025.