First-quarter drop for Vancouver commercial real estate sales.

The value of commercial real estate sales in the Lower Mainland dropped 40 per cent in the first quarter of 2013 from the same time last year, and was the lowest seen since the first quarter of 2009, the Real Estate Board of Greater Vancouver reported Thursday.

There were 384 commercial real estate sales worth $886 million conducted in the first quarter of this year. Last year’s first quarter, the highest in five years, saw 480 sales.

“Commercial real estate activity eased in the Lower Mainland in the first three months of the year. This comes on the heels of a strong post-recession commercial market over the past few years,” said Sandra Wyant, the real estate board’s president.

A breakdown of the sales shows that there were 91 commercial land sales valued at $322 million, 159 office and retail sales valued at $253 million, 109 industrial land sales valued at $211 million, and 25 multi-family sales valued at $99 million.

A rezoning proposal has been put forward to develop a phased commercial development at 2020 Boundary Road, a site the Northeast corner of Lougheed and Boundary Road in Burnaby. Translink sold the site last year to the Open Road Auto Group for $19.2 Million.

The development will consist of:

• two or three high-end auto dealerships
• a 4-storey fully enclosed glass structured car parkade
• an 8-storey, 85,000 SF office building with underground parking and grade level retail uses
• a total density of 0.77 FAR

The auto dealerships are proposed to be the first phase of the development, with the commercial uses later.

Valuations are getting so high in Vancouver’s commercial market it is starting to affect deal flow, says a new report.

RealNet Canada Inc. says capitalization rates — the implied rate of return on a property — in British Columbia have gone so low that a 13% decline in sales in the first quarter can be attributed to the drop. The lower the cap rate, the more a property is worth.

“Transaction volumes experienced declines as the general market adjusts to changing value expectations in a record low cap rate environment,” said Paul Richter, director of research with RealNet, in the report. “Investment activity experienced a decline, however, demand for quality assets and development sites remains high.”

RealNet said there was 217 transactions of more than $1-million in the Vancouver market in the first quarter which amounted to $1.06-billion in activity. That was sharply down from the more than $1.2-billion in activity in the fourth quarter of 2012 but still 10% above the long-term quarterly average.