Metro Vancouver commercial real estate sales reach record $1.42 billion.

Commercial real estate transactions in Metro Vancouver reached an unprecedented six-month total of $1.42 billion during the first half of 2012, breaking the previous record of $1.03 billion set during the first half of 2010, according to a report released Wednesday.

The figures point to a longer-term surge and confidence in commercial land investments, experts say, but belie anxiety over diminishing industrial land availability as it gives way to more apartments and office towers.

Valuations for office buildings in Burnaby have risen over the past ten years amid declining cap rates and rising rental rates. The average value for office building sales in the past two years has been hovering around $200 / SF.

This market is predominantly characterized by larger office complexes, interspersed with smaller local office and strata business park office. Newly built buildings in the core areas such as Glenlyon office park and Canada Way corridor have achieved values over $250 / SF, with older product in local residential areas and industrial areas reaching below $100 / SF.

Cap rates have generally decline from an average above 8.0% to decline below 6.50%; a trend consistent with other suburbs in Vancouver.

Investment activity in this market has been relatively constrained given a lack of available product. As we reported in July, Bosa acquired a sizeable office asset located just off Canada Way at Sperling Avenue, for $33,000,000.

In terms of new supply, Metrotower 3 is currently under construction and is expected to complete in 2014. The leasing market remains in favour of tenants with a reported Q2 2012 vacancy rate of 11.2% (source: Colliers).

Building permit values in Vancouver hit $1.1 billion for the first half of 2012, a 39 per cent increase over the same period in 2011.

According to Vancouver mayor Gregor Robertson, over 6,000 jobs were created in the first half of 2012 because of construction activity in the city.

Commercial and industrial construction in the first 6 months of 2012 showed a rise in a year-to-year comparison with the same period in 2011. As of June 30, just over one million square feet of non-residential floor space was approved through building permits.

Courtesy: Journal of Commerce, September 4, 2012