Strata-titled industrial space continues to be hot property as large-bay structures enjoy strong demand among users. Ryan Beedie said as much at the Urban Development Institute outlook luncheon last month, with his Beedie Group moving ahead with plans for an additional 100,000 square feet of strata space at Campbell Heights to meet demand.
With free-standing industrial buildings trading at $150 to $190 a square foot, large-format strata units are appealing because they’re often available at a mere $115 and $130 a square foot.
“With the lack of free-standing buildings in the market and the premium those buildings achieve, a lot of these larger users – 10,000- to-20,000-square-foot users – are changing their minds and saying, ‘I’m going to buy that strata unit and save $30 a square foot,’” said Jordan MacDonald, principal of Frontline Real Estate Services Ltd. in Surrey.
The space is more efficient to build and meets the needs of cost-conscious users.
And despite the rip-roaring pace of the industrial market in January, users are price sensitive.
While available supply has given tenants options, Jon Bishop, vice-president and general manager of Devencore Co. Ltd. (the local office of global tenant representation firm Newmark Knight Frank Devencore), doesn’t see companies being blithe.
“We’re seeing growth, for sure. Companies are now looking at taking on extra space and growing,” he said. “But it’s a cautious approach nonetheless.”
The key considerations are cost and staff impacts; no one wants to pay more than they have to, and no one wants to lose staff as a result of a move. While a company such as manufacturer Nuheat Industries Ltd. has opted for new digs in an efficient structure that reduces its space requirements (among other features), Bishop said many companies are becoming owners.
“I think we’re going to see more interest in ownership over leasing for users over the next few years than perhaps historically,” he said, noting that the strata market has especially long legs.
“We’re going to see a lot of attention there in the next couple of years.”
With spring coming, neighbourhoods around Metro Vancouver will soon be ringing with the sound of renovations. But true to a survey RBC Royal Bank released last fall, many local homeowners are cost-conscious when it comes to renovating.
RBC found that just 55% of homeowners plan to renovate their properties in the next two years, with an average spend per job of $13,000 (and modest overruns). Canada Mortgage and Housing Corp. figures peg total home renovation spending in B.C. this year at $7.8 billion, up from $7.3 billion in 2010.
A recent survey of 140 renovation-minded homeowners at the Greater Vancouver Home Builders Association’s annual renovation council seminar for consumers lent further definition to this year’s intentions.
The single largest group of homeowners – 45% – plans to spend between $10,000 and $50,000 on renovation projects, with kitchens and bathrooms each accounting for 24% of renovation plans. (Kitchen and bathroom renovations are where homeowners can see the biggest bang for their renovation buck, another sign of locals’ smarts when it comes to renovation spending.) And 76% won’t require financing to meet their budgets.
Perhaps most curiously, given the amount of hand-wringing over the issue, the HST has been a small factor in the renovation plans of homeowners. The majority – 64% – say the tax hasn’t affected their plans. And of those who have been influenced by the HST, a surprising 11% are increasing their spending as a result of the tax.
Speaking of renovations, Anthem Properties Group and the Beedie Group are busy drafting plans for a makeover of Burnaby’s Station Square. The long-awaited redevelopment of the 11.8-acre site, adjacent to Metrotown between Kingsway and Central Boulevard, would boost the complex’s retail and residential components and add an office tower previously approved for the property but never built.
An application has yet to be made to the city, but Anthem vice-president of development Robert Blackwell expects this to happen shortly. The current form was a relatively intense use of the site when it was built in 1989, but Blackwell said redevelopment will update its form.
“It’s a true mixed-use development plan, and we’ve been spending a lot of time on what we call the public realm,” he said. “The current entity is not very soft, not very friendly. So a lot of the time we’re spending is to try and bring life to those edges.”
Anthem and Beedie bought Station Square in 2003 for approximately $50 million. The mall was tagged for a makeover in the mid-2000s, but a cooling real estate market deferred the plans.