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Big transactions drew interest in 2023 as deal-making slowed

Industrial, residential land deals topped reader interest in 2023
Record-setting pricing achieved by 1615 Franklin Street during an off-market transaction made it Western Investor's most-read Done Deal of 2023.

Vancouver saw $5.8 billion worth of investment transactions in the first nine months of 2023, a 55 per cent drop versus a year earlier, according to statistics real estate advisory firm Altus Group released Dec. 21.

“All sectors reported a decline in investment volume, with the industrial sector reporting the lowest year-over-year decrease of 23 per cent,” Altus reported last week.

The appeal of industrial is underscored by reader interest in deals posted to Western Investor over the past year, with industrial leading the charge.

Conwest Group’s purchase on Oct. 2, 2022 of 14.2 acres at 19469 92 Avenue in Surrey was the most-read industrial deal of the year. With an estimated two years to development, the land sold for $7.8 million per acre. Plans for the property have not yet been announced.

Northwest Development Ltd.’s purchase in May 2022 for $75 million of the former Vancouver Sun and Province printing plant at 12091 88th Avenue, also in Surrey,  was the year’s second-most read deal. Posted in January 2023, the deal underscored the appetite for sites with redevelopment potential in the region’s tight industrial land market.

The residential land sector saw $1.3 billion in transactions in the first nine months of the year, a 32 per cent decline from a year ago.

While residential activity slowed in the face of interest rate increases, Altus Group said ongoing challenges in Vancouver through the latter half of 2023 have muted signs of renewed optimism nationally.

Reader interest has not waned, however. A post in January 2023 regarding the late 2021 sale of a 22-lot Langley land assembly for $24.4 million was the year’s third most-viewed deal. The single-family lot assembly at 5300 53 Avenue and bounded by 53A Avenue, 200 Street, 200A Street and Michaud Crescent totaled 3.4 acres and sold Nov. 30, 2021 for high-density multi-family rental development.

The $63 million deal for the Robson Professional Building at 1525 Robson Street also commanded strong reader interest. The 0.37-acre development site is destined for higher-density redevelopment. It sold for more than $12 million above its assessed value, but $2 million short of the list price, pointing to the realignment of values in the face of higher interest rates even for desireable properties.

Curiously, all but one of the five most-read deals this year were posted in the month after Christmas 2022. This largely reflects both the slower pace of the market as it adjusted to higher financing costs.

The most popular deal reported by Western Investor last year was the off-market deal in June for an 800-unit self-storage facility at 1615 Franklin Street in Vancouver. The two-year-old income producing property sold for $43.7 million in a heated bid process conducted by the Victoria office of William Wright Commercial that achieved a record-setting price per-square-foot for the client.

New benchmarks are likely to be rare for the foreseeable future, however.

“Similar to other markets nationwide, investment activity is expected to be sluggish for the remainder of 2023 as investors exercise heightened caution amidst unfavourable market conditions,” Altus Group analysts Jennifer Nhieu and Phil Racine wrote.