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False Creek Flats leads Vancouver CRE development into 2023

New $2.1 billion hospital, office and industrial buildings anchor 450-acre site in East Vancouver
The new $2.17 million St. Paul’s Hospital and 18-acre health campus is under construction. | Photo: B.C. Government rendering

When Keltic Canada Developments Ltd. laid out plans last year for a new 10-storey medical office next to the under-construction new St. Paul’s Hospital in Vancouver’s False Creek Flats, it was assumed that its entire 102,000 square feet would be sold to individual owner-occupiers and investors.

Instead, California medical supply company Masimo Corp. bought the whole building at 229 Prior Street for $123 million on February 14, 2022.

The deal works out to about $1,200 a square foot, which was less than other office strata is being sold for in the Flats.

“Any time you’re looking at a larger-scale transaction there’s definitely going to be a different value than there would be, comparably, than doing smaller units and selling them individually,” explained Michael Buchan, a principal with Avison Young, which represented the vendor, Keltic.

Strata office space in the False Creek Flats, a 450-acre site in East Vancouver that is seen as shaping the future of Vancouver commercial real estate, is currently selling for $1,400 to $1,600 a square foot.

A confidentiality agreement limited what Buchan could say regarding Masimo’s purchase, but he noted that the strata property had experienced strong interest even before marketing began.

Rachel Li Lei, CEO of Keltic, said the company is now scouring the Flats for a site to build another strata office building for medical professionals. Keltic had bought the Masimo site in 2019 for $25 million. It may not find that price today in the Flats, which has seen a rush of land buys and development permits over the past two years.

These include:

• Lab 29 by LowTide Properties. The first purpose-built life-science lab in Vancouver in more than a decade, the eight-storey project will rise at 1629 Scotia Street next to St. Paul’s Hospital.

Lab 29

Lab 29, an eight-storey science laboratory by Low Tide Properties, is being built close to the new St. Paul’s Hospital | Photo: Low Tide Properties

• Archetype, a mixed-use development consisting of a strata industrial and office building (10 storeys) and a residential rental building (13 storeys) containing 216 secured market rental dwelling units; all over three levels of underground parking, by QuadReal and Hungerford Properties, at 1717 Lorne Street.

• A new 10-storey office tower at 306 Terminal Avenue in the Flats by Rize Alliance. It will total 146,890 square feet including 109,600 square feet of Class A open-floor office space within the upper levels, and 30,100 square feet of industrial manufacturing space in the lower levels. A floor space ratio density of five times (FSR5) the size of the lot is expected on the site, which is adjacent to the Main Street SkyTrain station.

• At 1725 Clark Drive on the eastern edge of the Flats, Alliance Properties is developing a five-storey building on a 1.5-acre industrial lot that Alliance bought in June 2019 for $30.5 million. Under FSR3 density, Alliance is completing nearly198,000 square feet of office and light industrial space.

And, of course, the new $2.l7 billion St. Paul’s Hospital and health campus at 1002 Station Street. The largest medical development underway in Canada covers 18.4 acres as the anchor for the False Creek Flats. It includes a new state-of-the-industry 548-bed hospital, and 800,000 square foot Clinical Support and Research Centre, which encompasses core research facilities including wet labs, biobanks and a medical conference centre.

PCL Construction began work on the new hospital early this year and it is expected to open in 2027.

Western Investor