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.

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After more than a year constructing the underground parkade, construction at the site of the new luxury hotel/residential project at 1153 West Georgia Street, has reached grade level. Sales are expected commence later this year. The developer, Holborn Group, had originally anticipated completion by 2010, but the project was delayed.

Trump Tower Vancouver Construction, picture by Built Form (SSP)

Trump Tower Vancouver Construction, picture by Built Form (SSP)

Arts and cultural groups are scrambling to find new venues after being told that a hip evangelical church has bought The Centre for the Performing Arts in downtown Vancouver and plans to take over the 1,800-seat theatre this summer.

Directors of the Vancouver International Film Festival, Goh Ballet and Unique Lives lecture series confirmed they were told last week by the centre’s management that the venue will not be available after the Westside Church takes over ownership in August.

…Diane Heal, the centre’s vice-president of operations, said the centre was for sale but referred all questions to Michael Law of Global Pacific Properties in Denver, Colo., an affiliate of Four Brothers Entertainment, which owns the centre.

Law did not return phone calls or respond to emails from The Vancouver Sun.

According to a March 27 blog on the website of the Westside Church, Pastor Norm Funk said he was “officially” and “publicly” announcing that a purchase sales agreement had been secured with the owners of the centre.