BC Real Estate Investment Hits High, With Instability in Corner – Floor | Pro IQRA News

Pro IQRA News Updates.

The real estate world in BC and Canada is generally very focused on supply chain issues and rising interest rates this year, but new real estate market investment statistics show that these factors have had little impact on the market in terms of transactions.

According to a new report published by Avison Young, BC sees commercial real estate investment worth an estimated $8.29 billion in the first half of 2022, with a “near-record” 458 transactions. These types of transactions include investments in the following markets: office, retail, industrial, land and multi-family.

Office Market

Real estate investment in BC office space was quieter in the first half of 2022 compared to the same period last year. Between January 1 and June 30, BC recorded a total of 20 transactions totaling $475 million, compared to 31 transactions valued at $771 million in the first half of 2021, which is about a 33% decrease in transaction volume. As a percentage of all sales, investment in office space also declined, representing 12.7% of total sales in the first half of 2021, but only 6% in 2022.

The decline was mainly due to a lack of supply, Avison Young said. Downtown Vancouver is a traditional hotspot, but Avison Young notes that nearly a third of office transactions in the first half of the year took place outside of Metro Vancouver, in places like Victoria, Nanaimo, Port Alberni, Kelowna and Kamloops. The biggest such sale was a $10.1 million deal for the Yates Center in Victoria, which was acquired by an institutional buyer in January.

However, within Downtown Vancouver, the biggest selling office was the 16-story, 147,088 square foot building at 1185 West Georgia Street for $135 million. A different Avison Young report focusing on the office-only market in the first half of 2022 found that Downtown Vancouver is adding upscale supply faster than absorption can keep up, resulting in high vacancies for AAA-class office space. Absorption began to catch up in the first half of the year, but more office buildings will add to Downtown Vancouver’s supply before the end of the year, such as The Stack, but have not yet reached full occupancy.

READ: The Stack, Vancouver’s Tallest Office Building, Now Postponed to Q4

Photo: Stacks

Retail Market

Investment in the retail market was “very strong” in the first half of the year, Avison Young said. The first half of 2022 saw $892 million of investment in the retail space, no more than $885 million in the first half of 2021, but there was a huge increase in transaction volume, with 2021 registering 41 transactions and 2022 registering 59 by mid-year.

Avison Young said that while the pandemic is changing the way people shop, with fears that it will destroy physical retail, investment statistics such as an increase in transactions show that fear has turned to confidence. The province of BC announced in late August that it had a staggering $1.3 billion budget surplus, with the reopening economy also cited as a significant reason.

READ: BC Government Finds $1.3 Billion Budget Surplus, After Expecting $10 Billion Deficit

Similar to the office market, however, most of that activity in the first half of the year took place in the secondary market, mainly because generally the more land available the farther from Downtown Vancouver you get.

To that end, Vancouver still saw the highest number of transactions, with nearly 15 of 59 deals, but the highest value transaction was the $30.8 million deal for the Wing Sang Building in Chinatown, which will be transformed into a Canadian first. great Chinese-Canadian museum.

Meanwhile, outside of Vancouver, some transactions involve significantly more money. That includes New Westminster’s Columbia Square sales for $136M, Valley Fair Mall at Maple Ridge for $76M, Trenant Park Square in Delta for $70M, and Logan Creek Plaza in Langley for $57.3M.

Industrial Market & Land Market

Both the industrial market and the land market are hot in the first half of the year, according to statistics. The BC industrial market saw 79 transactions totaling $1.26 billion, up slightly from 73 transactions and $1.1 billion at the same point in 2021. Last year saw an unprecedented 154 transactions for $2.3 billion for the whole year, which means we are currently on pace to surpass that.

“Demand for industrial development land and complete buildings remains strong as products continue to improve and improve quality and efficiency,” said Avison Young. “However, demand for strata units is not that strong, making up a much smaller share of the market.”

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For land, assessed by redevelopment potential, BC listed 61 ICI (Industrial, Commercial, Investment) offers totaling $1.36 billion in the first half of 2022, while housing estates recorded 182 offers totaling $2.88 B.

What’s worth noting is that unlike office and retail space, land deals occur primarily within Metro Vancouver. In 2021, Avison Young estimates that 51% of ICI’s land deals occur in Metro Vancouver, but so far this year the number has risen to 83%. That’s also true for residential land deals—although interest is growing outside the region—with only 8% of sales occurring outside of Metro Vancouver.

The top ICI land deals in the first half of the year were $158 million deals for 1868 and 1951 Glen Drive in Vancouver, while two The second residential land transaction took place in Burnaby, for land near Brentwood Mall. The first was a $215 million deal in March for 8.34 acres of land and the second was a $112 million deal in May for 2.58 acres of land.

Multi-Family Market

In 2021, BC saw a total of 141 transactions worth $3.2 billion for the whole year. In the first half of 2022, BC recorded 57 sales for a total of $1.4 billion, which is still strong compared to the five-year and 10-year averages, but still hints at a decline, especially considering the nearly a third of $1.4 billion for the former. half of 2022 comes from one deal. The transaction is a portfolio acquisition made by Starlight Investments for 12 properties across the province, for a total of $493.8 million.

As expected, this weakness can largely be attributed to the rate hike, which started in 2022 at 0.25% and has since been raised to 3.25%. That increase is likely to continue, coupled with existing problems facing the industry — such as labor shortages and construction costs — and could result in project delays, clogging the region’s housing supply while demand remains consistent, as was some in the industry before it. to STORYS.

READ: “Nightmare Becomes Nightmare”: Developer Reacts to Assess Rise With Gloomy Prospects

“Due to the uncertainty surrounding rising interest rates as well as rising construction costs, it is expected that projects will continue to stall and cooler demand for multi-families will persist through the remainder of 2022”, Avison Young noted in their report. “However, demand for multifamily residences from consumers remains high — vacancy rates are low and international students are returning as borders reopen. While developers may delay the project, there is still a need for more multi-family products on the market. This is likely to lead to a rebound in the multi-family at some point in the future when the uncertainty surrounding interest rates eases.”

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