Real estate developers who came to market in the past year selling rather than leasing commercial space are finding a receptive and steady market across Metro Vancouver.
Strata commercial space has traditionally accounted for a fraction of the overall commercial market, but its popularity has been increasing over the past three years.
A new survey by Bramwell & Associates Realty Advisors shows the average price of retail strata space was $429 per square foot in the fourth quarter of 2014, up slightly from $426 in the same period a year earlier. The typical office strata space is selling for $393 per square foot, also up from a year before, while industrial real estate space rose to an average of $201 per square foot in the fourth quarter 2014, compared to $192 per square foot a year earlier.
Overall sales of non-residential strata space were 104 units in the fourth quarter, Bramwell reports, up from 78 in the same period in 2013.
New and well-positioned commercial space is outperforming the strata market. An example is the 150,000 square-foot first phase of City Centre 1 in central Surrey, which includes offices and two levels of retail space.
With 80% of the new 11-storey tower sold, the office space has been fetching $400 per square foot, compared to an average of $292 in the Surrey market. Retail space has sold for upwards of $600 per square foot, according to sales agent Doug LePatourel, vice-president of Colliers International. LePatourel, Colliers’ lead agent on the project, explained that close proximity to Skytrain and the Surrey Memorial Hospital places the LEED-rated tower among the premier commercial strata opportunities in the Fraser Valley. Most of the office and retail space has been sold to doctors and others related to the medical profession, LePatourel said.
The City of Vancouver posts the highest prices for commercial strata space, with retail selling for an average of $593 per square foot and office space going for an average of $536 per square foot, Bramwell reports.
Company principal Jeremy Bramwell is cautious in his outlook for Metro Vancouver’s strata commercial sales heading into 2015, however.
“As appraisers, we have seen indications of the strata market slowing,” Bramwell said. “Small business owners [the primary buyers] seem nervous over the direction of interest rates and the overall economy.”