East Vancouver 102,000 sq.ft. office tower sells for $123 million

Western Investor Staff
Western Investor

New building is in False Creek Flats and will complete in 2024 adjacent to the new St. Paul’s Hospital, which is now under development.

Avison Young, Vancouver, for Western Investor

 

Property type: New office building

Location: 220 Prior Street, Vancouver

Property size: 102,000 square feet

Sale price: $123 million

Purchaser: Masimo Corp., California

Seller: Keltic Canada Development Inc., Vancouver

Date of sale: February 14, 2022

Brokerage: Avison Young, Vancouver

Broker: Michael Buchan

 

© 2022 Western Investor

Late Summer Cool Off for the Edmonton Area Real Estate Market

Carrie Lysenko
other

 Like most of the country, the real estate market in the City of Edmonton and surrounding areas have been on a roller coaster ride since record-breaking peaks earlier in Spring 2022.  Being bolstered by the high prices of oil this year as well as the greater affordability of homes in the area has given Edmonton and most of Alberta a bit of a softer landing. According to the Realtors Association of Edmonton, August saw total sales volume decrease by -8.3% in the Greater Edmonton Area and -8.9% dip over July in the City of Edmonton proper.  This is a larger decline versus Alberta’s largest city, Calgary, which saw a decrease of only -2.6% versus July.  Edmonton is also down -12.7% year-over-year (y-o-y) which is slightly more than the Greater Edmonton area which posted a -12% drop.  Calgary posted only a modest y-o-y decline of -0.5% while comparatively, the Greater Toronto Area posted a sizable drop of -34% in sales volume versus 2021.

• Read: Hidden Gems for Sale in Edmonton Alberta

Price Drops Since Peak in May 2022 Still Showing Growth Over 2021

A drop in home sales volume is not the only decline the market is seeing.  As Canadians are feeling the pinch of higher inflation and the 300 basis points increase to the Bank of Canada interest rates this year; this has made some buyers hesitant to enter the market and caused a steady price decline month-over-month (m-o-m) since the peak in May 2022.  In the City of Edmonton, the composite benchmark home price has dropped to $392,400, according to the Canadian Real Estate Association (CREA).  This represents a 3.0% drop m-o-m and 4.25% dip since May.  However, the benchmark price is still up y-o-y by 4.1% across all property types.  A similar scenario can be seen across the Greater Edmonton Area with benchmark prices declining -2.8% versus July but still up 4.3% y-o-y.  

• Read: Alberta is One of Canada’s Strongest Real Estate Markets Right Now, Here’s What is Setting it Apart 

 

 

Not All Home Types Created Equal

While prices may be down from their peak, they are holding value versus mid-pandemic levels in Dec 2021.  However, a deeper dive by home types shows that not all home types are holding their value as well.  In the Greater Edmonton area, Apartment / Condos have dropped -1.2% m-o-m and dropped by -0.1% y-o-y.  While the dip versus 2021 may not seem significant, in the City of Edmonton, it is more pronounced with Apartment / Condos declining -1.6% y-o-y and -0.7% m-o-m.  Apartments are the only home type that have dropped in price versus 2021.  Single family homes are still up 4.3% in the city core and townhouses are even more interesting to those looking for more space but still at an affordable price.  Townhouses have increased 8% y-o-y despite suffering a small decline of -0.9% over July.  Comparatively, Calgary’s home prices have fared slightly better with apartments gaining in price by 10% y-o-y, detached by 13% and townhouses coming in at 14% growth versus 2021. 

According to eXp Realtor and local agent Drew Carlson, “Price reductions are common in Edmonton right now. Sellers are realizing that they have to be realistic and price their home properly.”

 

© 2015 – 2022 Zoocasa Realty Inc.

Downtown heritage department store to evolve into ‘hotel for computers’

John Mackie
The Vancouver Sun

Two floors of the former David Spencer, Eaton’s and Simpsons-Sears store will be converted to the Spencer Building Carrier Hotel

 Two floors of the 1926 David Spencer department store building at 515 West Hastings St. are being converted to the Spencer Building Carrier Hotel. Photo by John Mackie

The Harbour Centre complex at 555 West Hastings St. is already B.C.’s leading Internet connectivity hub. But the data centre is about to get much bigger, with the construction of the Spencer Building Carrier Hotel.But don’t be confused by the name.

“People take hotel and they think, ‘There’s already a Delta across the street, why are they putting up another hotel?’ ” said Chris Jones, the facility’s director of data centre infrastructure and operations.

“No, we’re putting in a hotel for computers.”

The construction will be on two floors inside the former  David Spencer department store, which is also a former Eaton’s and Simpsons-Sears and now is partly occupied by Simon Fraser University.

Two floors of the 1926 art deco heritage structure will be rebuilt for the carrier hotel, which is tech-speak for “a data centre with lots of connectivity in a major city or metro area.”

“In the technology sector a carrier hotel goes back to the ’90s,” explains Jones.

 

“So you’ve got the Westin Building in Seattle, One Wiltshire in Los Angeles, 60 Hudson in New York, 151 Front Street in Toronto and Harbour Centre in Vancouver.”

The carrier hotel will have 43,000 sq. ft. of space and provide 10 megawatts of “critical power” and a 25-kilovolt “primary electrical service” to Vancouver’s burgeoning tech sector.

“We’re going to develop all of the supporting infrastructure, both mechanically and electrically, for our future customers,” said Jones.

“We will sell to someone who will then install their own servers (to meet) all their own requirements. It could be Netflix or something, saying ‘we need two mega-watts of power and 100,000 servers, can we put it in your spot?’

They’ll put in their servers to manage their stuff.”

 

The 1926 David Spencer department store (foreground) is now part of the Harbour Centre complex at 555 West Hastings St., which includes a 28-storey tower (background). Both buildings are partly used as data centres. Photo by John Mackie

To put this in perspective, “all of the Harbour Centre complex, with everything, including data centre operators, runs about half” the 10 megawatts that will be available in the carrier hotel.

And Harbour Centre is a huge tech hub.

“Harbour Centre is the incumbent primary connectivity hub for Western Canada,” said Jones. “Primarily Vancouver, specifically, but we have over 20,000 connected fibres, so you need to connect to somebody, you come to Harbour Centre.”

The Harbour Centre complex is owned by Polaris, a Toronto company that has extensive real estate holdings in B.C., Ontario and Quebec. It will operate the Spencer Building Carrier Hotel as a separate business.

The new carrier hotel is also intended to be the Canadian “landing spot” for the Cascadia Fibre Trunk, “a private entity that is running fibre, high-density fibre, from Vancouver down to Seattle.”

 

“It’s a pretty important piece, because it’s going to bring a significant amount of new fibre that will last for the foreseeable future,” said Jones. “The existing fibres between Vancouver and Seattle are getting long in the tooth, they’re starting to have issues with age.”

The Spencer building opened just before Christmas in 1926 at 515 West Hastings St. The “commercialized gothic” structure was designed by McCarter and Nairne, the architects of the Marine Building.

David Spencer Ltd. was B.C.’s first department store chain. Founded in Victoria in 1873, it once boasted nine outlets around the province.

The Hastings store was sold to Eaton’s in 1948. Eaton’s moved to Pacific Centre in the 1970s and the site was redeveloped into Harbour Centre, which has a 28-storey tower. Simpsons-Sears took over the department store, then in 1988 Simon Fraser made Harbour Centre its downtown campus. The carrier hotel will not affect SFU.

 

© 2022 Vancouver Sun

Downtown heritage department store to evolve into hotel for computers

John Mackie
The Vancouver Sun

Brokerage partners on the value of good advice

Fergal McAlinden
other

Comprehensive guidance helped borrowers absorb the shock of interest rate rises, says duo

 As Canada’s mortgage and housing markets continue to shift, many borrowers who purchased a home during the pandemic-era boom are having to contend with interest rates dramatically higher than when they initially signed for their mortgage.

That simply underscores how crucial it was for agents and brokers to emphasize to their clients during that period of unprecedented low rates that borrowing costs would likely spike upwards in the future, according to the co-founders of a Toronto-based brokerage.

Inna Bogdanov (pictured top right) and Katerina Markevich (pictured top left), of IK Financial, told Canadian Mortgage Professional that educating their customers on the likelihood of rate increases had been among their main priorities during the days of rock-bottom rates and frenzied buyer activity during the past two and a half years.

“The mortgages were [lower] than 2% and we had those low interest rates and multiple offers on the property,” Markevich said, “but it wasn’t normal. Even at that time, we were preparing the clients [and telling them] the interest rates will go up.

“No matter if you were to take the fixed rate at that point and lock it [in] for five years – once the renewal will come, you will face completely different interest rates and you have to be ready for it.”

The Bank of Canada kept its trendsetting interest rate at a resolutely low 0.25% throughout nearly two years of the pandemic but has now introduced five consecutive rate hikes since March totalling 3%.

Read next: Revealed – how much Canada home prices will fall this year

Still, comprehensive advice in times of low rates meant IK Financial’s clients were largely prepared for this year’s rising-rate environment and had factored higher borrowing costs into their budget. At present, the duo’s guidance is mainly focused on reminding clients that the real estate market moves in cycles – and today’s high-rate climate won’t last forever, according to Bogdanov.

“We are true firm believers, and understand very well, that the markets are cyclical, and everything takes turns,” she explained. “We remind our clients that while we enjoyed the low interest rates for a while and everything was booming, it was great. But even back then, everybody knew this was unsustainable, it wouldn’t last forever and there would come a point when the market would take a dip.

“Whether it would be a gradual dip or more of a severe fall, more like what we’re experiencing now, that was unknown… But when it reaches its ultimate lowest point, which we [either] may have already reached or are about to reach, it will start to slowly go back up again.”

It’s important to remind clients that the market has seen worse times than it’s currently experiencing, Bogdanov said, and that mortgage professionals and their clients alike worked through those challenging conditions regardless.

The current market has also highlighted the importance of adopting a tailored approach to each client, with the suitability of specific options depending on the personal circumstances and risk tolerance of each client.

Read next: Fixed vs. variable: What’s in store for the rest of 2022?

Borrowers’ needs, goals, and plans for the next year to five years are some of the central factors that IK Financial said it takes into consideration when recommending a path for clients, with recommendations for variable rates only made to those individuals who have room in their budget for possible future variations in their payments.

“Of course rate variations matter and we do adjust what we tell clients based on the current rates that we’re looking at today,” Bogdanov said. “However, the general strategy never changes for us and our approach with clients.”

As for the outlook for the remainder of the year? The prime rate is likely to continue rising further, the duo said, which will probably contribute to a further fall in home prices. Still, they indicated that a healthy market should persist, driven in part by strong forecasted levels of immigration in the coming years.

The federal government has said it aims to welcome 431,645 new permanent residents this year, followed by 447,055 in 2023 and 451,000 in 2024 – meaning upwards of 1.3 million new Canadians are expected to have arrived in the country by that point.

“Realistically speaking, we have lots of immigrants and we have many people who are coming – especially to Toronto [and] Ontario,” Markevich said. “So we have huge, huge demand on property right now.”

 

Copyright © 1996-2022 KM Business Information Canada Ltd.

Nanaimo 0.4-acre land assembly sells for $1.69 million

Western Investor Staff
Western Investor

The land in Vancouver Island city ‘s south end is seen as a prime for residential development.

Fraser Elliott, Vancouver , for Western Investor

 

Property type: Development land

Location: 535-545 Nicol Street, 575 Nicol Street and 120 Needham Street, Nanaimo, B.C.

Land size: 19,034 square feet

Land size in acres: 0.04 acres

Zoning; Potential for 4-6 wood-frame residential redevelopmentList price $1.69 million

Sale price: $1.65 million

Date of sale: September 1, 2022

Brokerages: Fraser Elliott, Vancouver (listing agent) and The Firm Real Estate Service, Vancouver

Broker: Fraser Elliott

 

© 2022 Western Investor

Masimo signs $123 million deal for False Creek office space

Peter Mitham
Western Investor

Building will be home to 170 workers when it opens in 2025 

 California’s Masimo Corp. is buying 220 Prior Street, set to complete in 2024, for its Vancouver offices.MCM Partnership

California medical device company Masimo Corp. (Nasdaq:MASI) will pay $123 million for digs adjacent to the new St. Paul’s Hospital on the False Creek Flats.

The deal works out to about $1,200 a square foot (not including GST), about 20% less than nearby projects, and a reflection of the fact Masimo is taking the entire building, located at 220 Prior Street.

“It was going to be marketed on a strata sale basis, so the building had been designed for smaller units but also with full-floor opportunities,” said Michael Buchan, a principal with Avison Young, which represented the vendor, Keltic Canada Development Co. Ltd. “Any time you’re looking at a larger-scale transaction there’s definitely going to be a different value than there would be, comparably, than doing smaller units and selling them individually.”

Strata office space in the False Creek Flats and the adjacent Mount Pleasant area is currently selling for $1,400 to $1,600 a square foot. Strata office space at Archetype, a mixed-use development by QuadReal Property Group and Hungerford Properties at 220 East 1st Avenue, is selling for $1,500 a square foot.

A confidentiality agreement limited what Buchan could say regarding Masimo’s purchase, but he noted that the property experienced strong interest even before formal marketing began. Ultimately, the deal with Masimo pre-empted a full marketing campaign.

“There’s been many groups who have followed up and, unfortunately we can’t do anything,” he said.

Keltic acquired the property, formerly home to a warehouse, for $25 million in 2019.

Masimo signed the deal February 14, according to its latest quarterly report, and Keltic officially broke ground on the 102,000-square-foot property on August 30.

Masimo paid an initial deposit of $21 million. The remainder of the purchase price, “subject to certain adjustments,” will be paid when the building completes in the second half of 2024.

Masimo anticipates to have 170 workers in the space when it takes occupancy in 2025. Its local staff currently work out of 17,500 square feet downtown, adding 13,000 square feet to its footprint at 666 Burrard Street earlier this year.

Masimo describes its core business as non-invasive monitoring of arterial blood oxygen saturation and pulse rate, with additional business lines including devices for blood constituent, brain and breath monitoring.

It is just one of a number of U.S. tech companies driving absorption in the downtown office market earlier this year, though the pace of deals has slowed in the latest quarter as rising interest rates weighed on business confidence. But many expect the tide to turn by the time projects such as 220 Prior complete.

“The announcement is great for Vancouver and the area,” Buchan said, noting that the location adjacent to the new St. Paul’s Hospital campus attracted interest from medical users as well as the tech sector. “There was quite a bit of interest from the tech world. A lot of interest from the life sciences world, as well as medical professionals, general office users and groups that really felt a synergy with what’s going to be created down there.”

Cushman & Wakefield senior vice-president Matthew Maclean said groups have been slow to decide on space at Archetype but interest remains strong. The ownership group behind Archetype is patient, and are confident demand will increase prior to the building’s completion in 2025.

The deal with Masimo underscores the long-term appeal of the False Creek Flats.

“It acknowledges that the new hospital is going to be throwing out lots of employment density,” he said.

St. Paul’s is currently scheduled to complete in 2026.

 

© 2022 Western Investor

Home prices to decrease 2.2 per cent this fall, Re/Max report forecasts

Canadian Press
The Vancouver Sun

The network of real estate brokers and agents said Wednesday the moderation in the market for the September-to-December period comes amid rising interest rates, record inflation and broader global and economic uncertainties.

 A home for sale and sold sign in Calgary, May 4, 2021. Photo by Gavin Young /Postmedia Network

A report by Re/Max Canada forecasts the national average home sale price in Canada will fall 2.2 per cent in the final months of the year.

The network of real estate brokers and agents said Wednesday the moderation in the market for the September-to-December period comes amid rising interest rates, record inflation and broader global and economic uncertainties.

Mortgage rates have risen sharply this year, raising the cost of borrowing for potential buyers.

Re/Max Canada president Christopher Alexander said many markets are experiencing softer sales given the recent interest rate hikes.

“This provides some reprieve from the unprecedented demand and unsustainable price increases we’ve seen across Canada through 2021 and in early 2022,” Alexander said in a statement.

“However, the current lull in the market is only temporary. Until housing supply increases, these ‘boom’ and ‘bust’ cycles will likely be a recurring event.”

Prices in Metro Vancouver are expected to decline 3.0 per cent, while the Greater Toronto Area is forecast to fall 6.3 per cent. Winnipeg is expected to drop 8.0 per cent.

However, the drop in prices in the final months of 2022 isn’t expected to be universal. The report said seven out of the 30 markets analyzed are likely to experience modest price appreciation between 1.5 and seven per cent.

Calgary is expected to rise 3.0 per cent, while Edmonton is forecast to gain 1.5 per cent. St. John’s, N.L., is predicted to gain 7.0 per cent.

The report follows a move by the Canadian Real Estate Association earlier this month to cut its forecast for home sales this year and lower its expectations for price growth.

CREA is expecting 532,545 properties to trade hands via Canadian MLS systems this year, down 20 per cent from the 2021 annual record, while sales are expected to drop another 2.3 per cent in 2023.

The association also forecasts the national average home price is forecast to rise by 4.7 per cent on an annual basis to $720,255 by the end of the year and edge up another 0.2 per cent to $721,814 in 2023.

The outlook is down from CREA’s forecast in June that predicted a 14.7 per cent decline in sales this year and a 10.8 per cent increase in the national average home price.

 

© 2022 Vancouver Sun

Revealed how much Canada home prices will fall this year

Fergal McAlinden
other

The market cooldown is set to continue

The national average home sale price will fall 2.2% in the remaining months of the year, according to a new report by RE/MAX Canada.

Soaring interest rates, sky-high inflation, global economic unrest and higher mortgage costs will continue to prevail between now and December, the real estate broker network indicated, with a softer housing market expected as a result.

The market has already witnessed a protracted cooldown since peaking in March, with national home prices and sales falling amid a series of interest rate hikes by the Bank of Canada and an ongoing cost-of-living crisis across the country.

Read next: Canada’s inflation rate falls again

Recent weeks have seen the Canadian Real Estate Association (CREA) cut its forecast for home sales and price growth for the remainder of this year.

RE/MAX’s 2022 Fall Canadian Housing Market Outlook Report revealed that the network’s brokers and agents anticipated a decline in sales throughout the fall in 24 of the 30 markets surveyed, although president Christopher Alexander said that activity was likely to pick up again soon.

“The current lull in the market is only temporary,” Alexander said in prepared remarks accompanying the release of the report. “Until housing supply increases, these ‘boom and bust’ cycles will likely be a recurring event.”

 

Copyright © 1996-2022 KM Business Information Canada Ltd.

Another 1,000 jobs coming to Calgary

Frank O’Brien
Western Investor

Days after a 1,600-job aircraft manufacturing plant was announced, global tech firm Infosys plans to double its workforce downtown

  The jobs keep coming to Calgary.

Just five days after De Havilland Aircraft of Canada announced it will open a manufacturing facility near Calgary that will employ 1,600 workers, a global tech firm said it is bringing 1,000 jobs to downtown Calgary.

Infoys, a leader in next-generation digital systems, has doubled its original hiring commitment from when the company first expanded into the region in 2021.

“Today is the beginning of our next chapter in Canada as we open the Infosys Digital Centre in Calgary,” said Ravi Kumar, president, Infosys. “Calgary’s IT innovation potential is unlimited, and we are delighted to be a part of its future.”

The Bangalore-based company officially opened its new Digital Centre in Calgary Centre on September 26. Space for 1,000 people will eventually require about 200,000 square feet of office space, analysts say.

The Calgary Centre is part of Gulf Canada Square at 401 – 9th Avenue S.W. The new digital centre will train, upskill and reskill employees in advanced digital technologies, including big data and cloud.

“Infosys’ choice to establish Calgary as a major technology centre is a big moment for our city and further demonstrates our city as a prime destination for the world’s leading technology companies,” said Calgary Mayor Jyoti Gondek. “Building a thriving innovation ecosystem takes a village, and Infosys will play a key role in our growth.”

The mayor added that  Infosys will partner with local universities to train Calgary students and create job opportunities.

“Infosys could have chosen any place in Canada for this new Digital Centre, but they selected Calgary to tap into our pool of tech talent and to form partnerships with our educational institutions. Infosys will be training the next generation of technology innovators and business leaders right here in our province,” said Tanya Fir, Minister of Jobs, Economy and Innovation, Government of Alberta.

“The opening of the Infosys Digital Centre in the heart of our city shows that Calgary is recognized as a top tech location where bright minds and big ideas come together,” added Brad Parry, president and CEO, Calgary Economic Development, in a statement.

“Calgary’s IT innovation potential is unlimited, and we are delighted to be a part of its future,” Kumar said. Infosys has operations in more than 50 countries, with approximately 300,000 employees providing provides digital services and consulting for clients in many industries, including natural resources, and energy.

The City of Calgary gained 7,000 jobs from July to August, lowering the unemployment rate to 4.9 per cent, according to Statistics Canada.

 

© 2022 Western Investor