Conversations about Vancouver seem destined always to turn to real estate. Travel abroad, and the discussions turn on two points: the beauty of the city’s natural setting, and property values.
Perhaps no event set the stage for what has unfolded in the past 25 years more than Expo 86. According to condo marketer Bob Rennie, who got his start in the business with Dan Ulinder in 1990: “We had Expo 86 and handed out our business card to the world and they kept it.”
Hong Kong billionaire Li Ka-Shing bought the former exhibition site on the north shore of False Creek in 1988 for $145 million – a pittance, some complained – and embarked on a 20-year redevelopment project through Concord Pacific that transformed Vancouver into Douglas Coupland’s City of Glass.
Meanwhile, on the opposite side of the downtown peninsula, Tokyo-based Aoki Corp. acquired 1.4 million square feet in Coal Harbour and began developing the Bayshore community.
Marathon Realty Ltd. followed suit, undertaking the transformation of the former Canadian Pacific Railway properties to the east.
The developments came at a time when the crushing of pro-democracy demonstrations in Beijing’s Tiananmen Square in 1989 was fuelling anxieties and migration from Hong Kong in advance of the territory’s handover to China in 1997, and a long history of social and family connections made Vancouver the place to be. While locals railed against the transformation of the city into “Hongcouver,” the newcomers found Vancouver enjoying a boom.
GDP growth was beginning to pull out of the funk it had entered in the late 1980s, while unemployment, which peaked at 15% in 1984, was falling. By 1991, it was trailing the national average – something B.C. could boast until 1998.
The activity contributed to sustained growth in the population, which increased 2.8% through 1989 and 1990, setting a pace that wouldn’t slow until 1998.
“The whole world wants Vancouver because everybody is moving here now and everything points up, up, up,” David Goodman, then an agent with Block Bros. Realty Ltd., observed at the time, saying the 1990s were “B.C.’s decade” and calling for greater rental development.
The wave of capital that accompanied immigration wasn’t limited to residential development.
Approximately 1.5 million square feet of office space was under construction downtown as the decade turned, including 1095 West Pender, Cathedral Place at 925 West Georgia and the FortisBC tower at 1111 West Georgia. Meanwhile, at least twice that amount of space was under construction in the suburbs, a boom unmatched until the tech sector’s rise a decade later. But many of the campus-style suburban developments built at the time would eventually be caught out by the rise of transit-oriented developments a generation later.
But the economic slowdown of the early 1990s finally put a halt to the dreams, and political concerns mounted through the decade economic growth in B.C. lagged the rest of the country. Developers including Nat Bosa, Eric Carlson and Rob Macdonald took their business elsewhere, while the leaky condo crisis dampened the residential market and residential prices stagnated into the early 2000s.
Yet the dot-com boom gave life to commercial development, and as warehouses shifted east in search of cheaper digs, film studios stepped in – the first wave of the city’s transformation into a digital media and production hub.
But the dot-com bust in 2000 also ushered in the greatest shock to local property markets since the 1980s. The terrorist attacks in the U.S. on September 1, 2001, compounded woes while the SARS outbreak of 2003 delivered a further hit to business travel and economic activity. Space returned to the market and downtown vacancies hit 13.8%, while in Surrey, openings peaked at a stunning 42.2%.
Nevertheless, the Bentall 5 office tower, launched in 2001 in the midst of the dot-com bust, would come to underscore the region’s resilience. Sold to Germany’s Deka Immobilien Investment GmbH in 2009 for a whopping $300 million as the rest of the world languished in the Great Recession, it changed hands again three years later, when Bentall Kennedy LP acquired it for $401 million – yet another increase in value and the most ever paid for a single asset in Metro Vancouver.
“You talk about the most-defensive assets globally, you’ll find that Vancouver is right up there,” Remco Daal, president and COO of Bentall Kennedy, said at the time.
“People lost confidence in the stock market,” adds Avtar Bains, now principal of Premise Properties Ltd., of what happened through the 2000s, and particularly after 2008. “Many people don’t understand and don’t want to play in the bond market. Gold was good for a while but not forever. So what do you invest in? The real motivation for real estate became cash flow, back to the basics.”
Planning policies supported investors’ confidence in the city and the region.
Building on a backlash in the 1960s against plans for a freeway through downtown, Vancouver planners had moved in 1986 to encourage residential development in the downtown core. Larry Beasley, co-director of planning, spearheaded a “living first” policy for the downtown peninsula that was successful enough to spawn the term Vancouverism to describe the style of city building it inspired.
But as new residents crowded into downtown, cresting 100,000, then 120,000, the city bowed to pressure from the business community regarding a potential shortage of office development sites. A two-year moratorium on rezonings and a review of planning policies and future office space needs followed, resulting in a redefinition of the city core from the downtown peninsula to an area bounded by 16th Avenue, Clark Drive and Burrard Street and Burrard Inlet.
Redefining the downtown core matched neatly with the distance the new generation of city dwellers was willing to commute. Developments along transit became a hot ticket for those who wanted to live outside the core, and towers clustered around stations east into Burnaby, New Westminster and Surrey; south into Richmond and, soon, north into Coquitlam.
Maureen Enser, who served as president and CEO of the Urban Development Institute from 1982 to 2012, says the appeal of downtown living is the fruit of seeds planted over the past 25 years.
“Public attitudes and acceptance of urban density started to change and evolve, and continue to change and evolve,” she says. “[But] the one constant that has never been able to be resolved is the lack of affordable housing. It continues to plague us as a problem, to this day.”
And it’s not just housing that costs more – all segments of the market are competing for space and fresh development opportunities. The solution will require greater cooperation among the 23 jurisdictions that compose Metro Vancouver, and inventive developers to serve the region’s emerging need for living and jobs space.
