Province
Prices for well-located prime properties, such as those within sight of downtown Vancouver’s Howe Street, have held their own during the past six months. Photograph by : Jon Murray, The Province, file
Healthy demand continues to push B.C.’s commercial real-estate market ahead, according to a new survey.
The total value of office, industrial and retail-investment transactions in the province came to $535 million in the first half of 2008, Avison Young Commercial Real Estate said yesterday in a mid-year review.
That’s up from $316 million in the first half of 2007 and is on pace to meet the $967 million posted for all of last year, Avison Young said.
The number of transactions valued at more than $5 million rose to 38 during the first half of this year from 24 in the same period in 2007, Avison Young said.
“Despite the economic downturn in the U.S. and turbulence in global financial markets, the B.C. economy continues to trend above the national average and demonstrate resilience, with solid economic fundamentals continuing to drive demand,” Avison Young spokesman Bob Levine said.
The average sale price fell to $14.1 million from $20.6 million in 2007, Avison Young said.
Industrial properties were the the most active asset class sold between Jan. 1 and June 30. That strength was powered by the disposal of Versacold Canada Corp.’s portfolio to Kingsett Capital in six trades amounting to $103 million, Avison Young said.
Prices for well-located prime properties have held their own during the past six months, but the number of deals in secondary and third-tier markets is declining, the firm said. “Properties in weaker locations or with vacancy-tenant covenant issues, especially in the B.C. interior and on Vancouver Island, as well as development sites in inferior locations are witnessing a decline in value,” Levine said.
Stricter lending practices in terms of debt-service coverage and loan-to-value ratios may sideline investors needing high leverage, Levine said.
Private investors were the chief buyers in the first half of this year, accounting for $319 million worth of properties, or 59 per cent of dollar volume.
Large pension funds accounted for $179 million, or 33 per cent of the dollar volume.
© The Vancouver Province 2008