Downtown Vancouver, particularly east False Creek, hottest market
Derrick Penner
Sun
Property developers flush with cash went on a spending spree in the first half of 2006 spurring a 58-per-cent increase in the commercial real estate market compared with 2005, the real estate services firm Colliers International reported Wednesday.
Investors spent $2.2 billion in the first half of the year, compared with $1.4 billion a year ago. Kirk Kuester, Colliers’ managing director in Vancouver, said land purchases — primarily by developers banking property for future use — drove that figure.
Kuester said transactions to buy land in Greater Vancouver totalled $800 million in the first half of 2006 compared with $300 million for the same period a year ago.
“The reason for that is that the economic fundamentals for Vancouver are really strong,” Kuester said.
“Demand [for property] is strong and the development community today is three [to] four years into a very profitable cycle. So they are all extremely well capitalized and able to aggressively acquire and land-bank for developments one, two, three years down the road.”
Kuester added that the downtown Vancouver market, particularly east False Creek, was the hottest market for land sales.
Rising prices also contributed to the value of transactions. Kuester said that land downtown typically sold from $125 to $130 per buildable square foot over the first half of 2006. That compared with the $75 to $80 per-buildable square foot it would have cost a year ago.
Vancouver was second only to Calgary in the Colliers International report, which tracked commercial real estate transactions in excess of $1 million in 13 major Canadian markets.
The Colliers research showed that investors in Calgary spent $1.7 billion on commercial real estate in the first half of 2006, a 178-per-cent increase over the same period in 2005.
Nationally, the report tracked a near record $10.7 billion in commercial real estate sales across all 13 markets, a 16-per-cent increase over 2005.
“Activity was fuelled in large part by the strength of western Canada along with strong economic fundamentals, low interest rates, abundant debt capital and improved leasing markets,” Keith Reading, Colliers’ vice-president, research, said in a release.
© The Vancouver Sun 2006