The sale of a downtown site for three times last year’s assessed value highlights the continuing strong demand for commercial real estate in Vancouver’s central business district.
The Executive Group of Companies has agreed to spend $19 million to buy a 6,240-square-foot site at 833 West Pender Street that houses an Edward Chapman Ltd. menswear store.
The 45-year-old store is around 16,500 square feet but the site is zoned for up to 56,160 square feet, so redevelopment is almost a certainty.
Indeed, the family-owned, Vancouver-based Executive Group confirmed to Business in Vancouver that it plans to redevelop the site but would not say what it plans to build or when. Its past projects include hotels, office and residential real estate.
Edward Chapman owner Edward Chapman told BIV he is not sure how long the Executive Group will let him stay on the site that his family bought in 1966 and built the store on in 1971.
“People think that our store is a heritage building or something like that, but it is relatively modern and just has a facade to make it look old in an old English style,” he said.
Chapman, who is 57, may reopen his store in a smaller space but he said he may simply close the 127-year Edward Chapman retail brand, which has been a sideline business in recent years. Chapman’s main business has been to manage commercial and rental properties. He plans to continue to do that and not simply to retire.
Six bids were made after Chapman, last summer, hired CBRE to solicit bids from potential acquirers.
(With new development on one side and an owner who has no interest in selling on the other side, the development footprint for the Edward Chapman site is limited | Rob Kruyt)
“There were some close bids to the winner and there was a wide range between the bids,” CBRE senior vice-president Lance Coulson told BIV.
Bidders included developers, investors who wanted to retrofit the building and lease it out and investors who wanted to renovate the store to use themselves.
Not surprisingly, the highest bid came from a developer that plans to redevelop the site and add valuable density.
New adjacent developments and neighbours unwilling to sell their land mean that there is no possibility for the Executive Group to expand its new development site.
To the east is the under-construction, 31-storey Exchange tower that Credit Suisse is spending more than $200 million to build.
To the west is the eight-storey Pender Pacific Building that Jalal Holdings owns and has no intention to sell.
“We are tenants in our building, we like the real estate and we just signed Tim Hortons to a 20-year guaranteed lease at street level,” Jalal Holdings director Moojan Azizi told BIV. “We just don’t have the intent to sell, either.”
BC Assessment pinned the Edward Chapman site’s value at $6,210,200 in 2016, and the property’s assessed value increased 18.1% to $7,335,800 earlier this month.
“Time will tell if it was the right time to sell,” Chapman said. “I’ll either be shown to be a genius or a fool.”
CBRE’s Coulson said he believes that the high bid, compared with the site’s assessed value, stems from the fact that there is almost no commercial space listed for sale in Vancouver’s central business district.
“If you want to do a redevelopment, whether it is office or hotel – whatever you want to do – there are just very few opportunities in the downtown core,” he said.
Some past Vancouver projects developed by the Executive Group include the Portofino Tower at the northwest corner of Howe Street and Pacific Boulevard and the Executive Place Tower at the northeast corner of Howe and Helmcken streets. •