Sunbelt shines
Sunbelt states from Florida to California have been attracting the interest of Vancouver private equity firm Second City Capital Partners, which recently acquired the Century Fairwinds tower in Orlando, Florida, and is scouting assets in Arizona and Texas.
Second City and its Florida-based operating partner Tower Realty Partners Inc. paid $14.2 million for the 169,600-square-foot office block, built in 1982. Second City aims to undertake capital improvements to raise occupancies higher than 81% – regardless of where the U.S. economy heads.
“We think that the U.S. has stabilized to a certain extent,” said Kyle Dunn, vice-president, investor relations for the company, a venture of Sam Belzberg and Bosa Properties Inc. “We’re not expecting a rapid recovery; the U.S., in our opinion, is going to bounce around the bottom for some time, but that’s the nature of the opportunity. ... If you’re smart within that environment, and you don’t require an economic rebound for the practicality of the deal to succeed, then you’re in a strong position.”
The position’s strength is illustrated in the 242,000-square-foot City Center complex in St. Petersburg, Florida, which Second City acquired with Tower in December 2010.
A few improvements to the property have helped boost occupancies to 72% from 53% over the past 18 months.
“[We] just cleaned up the overall building, put in really strong management, reduced the overall operating costs,” Dunn said.
Second City also owns a 594,000-square-foot office property in Denver, Colorado; a wellness centre in Peoria, Arizona; and a 29-apartment block in Brooklyn, New York.
Second City isn’t the only company that’s been active in the U.S.
Vancouver-based Nicola Crosby Group picked up three buildings in Seattle’s Pioneer Square last December for $19.1 million.
The properties totalled 140,500 square feet, primarily office space with a handful of residential units.
Double green
Adera Development Corp. recently received an energy efficiency award from the Greater Vancouver Home Builder’s Association for incorporating a waste-water heat recovery system in Seven35, a 60-unit multifamily project on West 15th Street in North Vancouver. Developed by Vancouver-based International Wastewater Heat Exchange Systems Inc., the system is a first for a residential project in North America.
But the system is also notable for helping Adera garner both LEED (Leadership in Energy and Environmental Design) Platinum and Built Green certification for Seven35.
While rare for any builder, the two certifications are especially notable for Adera, a long-time supporter of the Canadian Home Builders’ Association Built Green certification for residential builders.
Adera president Norm Couttie has previously observed that LEED may be fine for highrises but isn’t necessarily suitable for projects where individual owners manage water use and suite-specific infrastructure.
Seven35’s heat recovery system was different, however.
Scaled to the size of the 60-unit project, it will preheat domestic hot water and save homeowners approximately 75% on energy costs.
Moreover, it didn’t add significantly to Adera’s construction costs.
Construction on the final units at Seven35 completes this month.
Foreign ownership
Real estate was the last thing on this columnist’s mind when principals from some of Australia’s biggest wine companies rolled into town May 11 to showcase their latest offerings.
But walking through Yaletown after a vinous lunch featuring enjoyable Rieslings and a few luscious Cabernet blends, one visitor looked at the surrounding towers and praised Vancouver’s success at locating residential space adjacent to downtown offices.
This isn’t the case in Adelaide and other cities in Australia, he said, where most people are priced out of downtown. Then he checked himself, asked about pricing in Yaletown, and the conversation quickly turned to investors’ effect on property values.
“But you have restrictions on foreign ownership that help, yes?” this columnist asked.
Yes, but they’re not wholly effective: Australia’s Foreign Investment Review Board now allows developers to sell every unit in a given project to foreign buyers if the project is also marketed domestically.
State approval of new home purchases by offshore buyers consequently jumped last year to 3,976 from 1,959 a year earlier.
Without China, the winery rep added, developers would be making far fewer sales. •
