Now that things have been clarified regarding new tax rules in British Columbia real estate, we thought it makes sense to clarify what “hasn’t” changed. While a variety of new measures have been brought in to address the run-away price increases in Greater Vancouver residential markets, the commercial markets remain the same. Even though the commercial markets are very active, the taxes addressing home affordability have not been levied on commercial property and rightly so. That includes the market for multi-family developments, so that the construction of new units continues to be encouraged, so as to increase supply and hopefully moderate prices.
So what has transpired in the Greater Vancouver commercial market over the last year? In a nutshell, sales are down about 15% and values are up about 15%. This is primarily because of decreasing available sites, combined with decreasing overall vacancies (office 6.3%, retail 3.1%, and industrial 3.0%). In addition, Downtown Vancouver office vacancy was at 5% in the third quarter of 2017, which was the second lowest in North America. This has resulted in speculative office construction, with some of the largest and most conservative commercial investors, such as the Ontario Pension Fund, making large investments in this market. An example on the extreme end, is the uniquely positioned Waterfront Centre by Bosa Development, which has set new sales price records of $2000 per square foot! Although the average commercial price per square foot is $830, this is still approaching the average condo price per square foot of $1023 in Vancouver.
The question becomes “where is all of this demand coming from?” Part of it is from natural growth in the region, which at 6.5% over the last 5 years exceeds the national growth rate of 5%. Probably the larger part of the demand derives from the economic vitality of the City and the growing demand for “safe havens” for investors around the world. The recent history over the past few decades shows Canada in general and Vancouver in particular to be a good place to invest money from overseas. In addition to the strong connections to Asia Pacific, there are historical connections to the U.S. and growing interest from Europe. The area adjacent to Downtown Vancouver, False Creek Flats, has several big names coming in to produce the equivalent of 10% of the Downtown office space in this redeveloping area. Vancouver’s Broadway Corridor/Mt. Pleasant area is also flourishing adjacent to Downtown, with over 500,000 square feet of construction underway.
While office and retail is being driven by sectors such as technology, advertising, media, information, accounting and education, industrial demand is also booming due to decreasing land available for a growing population base. Greater Vancouver’s industrial vacancy rate at 3.0% is low, but Vancouver City’s industrial vacancy rate at 1.8% is miniscule. All of these commercial markets provide an opportunity for investment as part of a vibrant economy in one of the world’s most desirable cities, with one of the best reputations for safety and security. If you are interested in this type of a situation, we at Maude, MacKay & Co. Ltd. are here to assist you in finding the property for your investment goals.
Keep up to date
To be updated regularly with what’s happening in BC, simply click Property Hot Spots in Vancouver.
Or simply complete the form below for one of our specialists to contact you.