This week’s top stories have a more optimistic outlook on the market than last week’s delayed or abandoned projects. This week’s roundup includes traction on two new tower developments in downtown Vancouver and Edmonton. The new towers are creating a buzz on WesternInvestor.com, either for being architecturally unique or larger than surrounding buildings. Edmonton also made news for an impressive recovery in investment year-over-year, perhaps hinted toward a post-recession improvement in economy. Lastly, as reported on last week, housing prices in Vancouver have begun to rebound from the foreign buyer tax hit, but new stats this week show inevitable spillover into nearby municipalities.
Here are Western Investor’s pick of the most chatter-worthy commercial real estate stories published this week.
Proposal for Edmonton’s tallest building approved – Western Investor
A local Edmonton development is moving along with plans to build a new 28-metre tower that will become the tallest building along the city’s skyline. The Quarters Hotel and Residences is one of a few major developments under planning or construction in an effort to revive the city’s downtown.
In October 2016, developer Alldritt Land Corporation announced plans to build The Quarters Hotel and Residences in downtown Edmonton. The project features hotel, residential, retail and public space components. The City of Edmonton approved Alldritt’s rezoning application at the end of April, by a vote of seven to five. The application detailed amendments to the North Saskatchewan River Valley Area Redevelopment Plan and the zoning bylaws.
"With today’s City Council approval, Alldritt Land Corporation will continue building on the dreams of those who made Edmonton the city it is today through the development of an 80-storey mixed-use tower beside the Shaw Conference Centre," said the company in a press release.
Plans and renderings for the glass tower show an elevated walkway above Grierson Hill Road, connecting the site’s green space and McKinney Riverfront Park. The property will also feature a series of terraces overlooking the river valley, connected to coffee shops, restaurants and retail stores.
The project is in pre-construction phase. Demolition of the site’s vacant buildings is expected to begin shortly.
The building is said to eclipse the 66-storey Stantec Tower as the city’s tallest building.
Commercial investment in Edmonton doubles – Western Investor
A recent report from Barclay Real Estate may justify the construction of Edmonton’s new, tallest tour – commercial investment in the city has grown drastically, showing increased confidence in Edmonton’s economic potential.
First quarter statistics show commercial real estate investment in Edmonton has increased nearly 100 per cent since the start of last year, lead by multi-family sales.
Commercial investment reached $692,320,575 in the first quarter of 2017, posting a 96 per cent increase over the 2016 first quarter value of $353,181,046. Barclay Street Real Estate recorded a year-over-year dollar value increase of $339,139,529.
“To March 31st, the multi-residential asset class was the top-performer, comprising of $290 million or 42 per cent of first quarter investment,” the report states. “Edmonton’s multi-residential market continues to appeal to purchasers seeking a relatively stable cash flow.”
The multi-family market saw 13 transactions during the first quarter, lead by a $191-million sale of 8508 Jasper Ave. to California-based developer Resort Equities Inc. The 694-unit was acquired for $275,000 per suite. Minto Properties purchased the second-priciest multi-family property of the first quarter – 10023 115 St. – from Pembroke Investments Ltd. for $46.8 million.
Retail investment accounted for the 25 per cent of first quarter investment, bringing in four times the dollar volume as compared to last year. As of March 31st, 12 retails sales were recorded with a total value of $176 million.
“This trend carries forward from mid-year 2016, when investors began responding to accelerating leasing activity and the positive ripple effects of the Rogers Place completion and First Capital’s Brewery District,” the report says.
Local developer proposes stacked cube office tower at West Georgia – Western Investor
Vancouver has long made a play for attracting tech talent and a new, creative building on a landmark street is hoping to act as a magnet for worldwide technology companies.
Gillespie’s development company Westbank Projects Corp. and design firm Merrick Architecture is proposing the land at West Georgia be rezoned from Downtown (DD) District to Comprehensive Development (CD-1) District, to allow construction of a 24-storey LEED Platinum structure.
The building will be adjacent to the Vancouver Public Library’s main branch and serve as a landmark at the eastern gateway into downtown, according to Westbank’s letter of intent.
“The building is conceived as a cluster of white cubes that are bound by lush gardens,” reads the architect’s design rationale. “Together they merge into a staggered silhouette that is neither a tower nor warehouse, but a 3-dimensional campus.”
The design will be achieved by forming a cogwheel of stacked boxes around a central, circular concrete core. Each box will consist of four floors. The space between the cubes will be filled with water and greenery.
“Unlike the first corporate towers with curtain walls and open plans in the 1950s, the new, tech-oriented work environment elicits collaboration, creativity, and spontaneity,” the rationale states. “Here, the boxes create natural compartments within a continuous floorplate, allowing offices to be variously partitioned while also staying close to the façade.”
The ground level will feature a four-storey high lobby with potential for commercial retail spaces. Interior concept renderings also propose glass ceilings and flooring.
The ambitious plans for the site are in line with Gillespie’s avant-garde approach to urban planning.
"The way we build workspaces today should in no way resemble how workspaces were built 20 years ago,” Gillespie said in his letter of intent to the City of Vancouver. “With this project we are attempting to challenge all of the impediments to the creation of flexible, creative workspace.”
Vancouver home price increases spread to surrounding areas at measurable rate – Business in Vancouver
An increase in Vancouver home prices has spilled over to areas like Richmond and the North Shore, according to Business in Vancouver. This spillover can also occur in the commercial market.
It is no secret that when home prices go up in the City of Vancouver, prices in other municipalities across the Lower Mainland will also grow.
According to a new report from the Canada Mortgage and Housing Corporation (CMHC), the rate at which prices in any given municipality will grow is measurable and consistent with commuting distance from the city.
In some cases, the resulting price increase, which CMHC calls the “spillover effect,” can take several years to set in, but this is not always the case; sometimes the effects can be immediate.
The effects have been shown to continue over the next several years. For example, that same 1% increase will, after five years, have caused an increase closer to 1.2% on the North Shore.
“In Richmond and the North Shore, the long-run spillover effect from Vancouver was as strong as the long-term effect on Vancouver itself,” the CMHC said in its report. “When prices increased unexpectedly in Vancouver, they eventually had the same effect on Richmond and the North Shore.
“Beyond commuting distance, the effect is similar, regardless of distance,” according to the report. “After five years, in places as far away as Kelowna, for example, prices were 0.5% higher than they would have been otherwise.”