Top 10 Land Deals of 2016

Residential development site sales in Metro Vancouver topped $4.5 Billion in 2016. It’s a staggering value only made possible by the confluence of a variety of local and international market forces including: incoming capital, a feverish residential real estate market, and a perceived lack of quality land available for sale. Each of these factors seemed to create the perfect storm in late 2015 and early to mid-2016 and have played a large part in driving land values to record highs.

To put the year we’ve had into perspective, the total land transaction value for 2016 almost matches the previous two years combined ($2.5B for 2015, $2.4B for 2014).

Here is a brief look at each of the 10 largest land deals of 2016:

#1 – Oakridge Transit Centre, 949 West 41st Avenue, Vancouver

OTC_3Price:                   $440 Million

Site Area:            13.8 acres

Vendor:                Translink

Purchaser:          Intergulf Developments / Modern Green Development

The goods:         This was by far the biggest land deal of the year – though the deal is structured to be paid over five years. The former bus barn site was declared surplus land several years ago by Translink and the City of Vancouver initiated a planning policy for the site and surrounding area in 2014. The planning policy was approved in December 2015 to allow for over 1,265,000 SF of density in several low and midrise buildings.  

Shortly thereafter the “OTC” site was marketed by Cushman Wakefield. The site secured offers from 14 potential buyers in the spring of 2016 and was ultimately sold to a partnership between Intergulf and Modern Green Development.

A listing video overview can be viewed here:

#2 – Pearson Dogwood Lands, 650 West 57th Avenue, VancouverPearson_5

Price:                  $299.6 Million

Site Area:            25.4 acres

Vendor:                Vancouver Coastal Health

Purchaser:          Onni

The goods:          This prime site at Cambie and 57th was sold by Vancouver Coastal Health in 2014 as part of a phased deal with Onni. The bulk of the sale formally completed in March. A formal rezoning application has now been submitted which contemplates over 3 Million SF of density, to be completed in five phases with over 10 towers, several mid-rises and a future Canada Line Station. The deal includes replacement of existing VCH facilities on-site.

#3 – Molson Brewery Lands, 1550 Burrard Street & 1655 West 1st Avenue, Vancouver

Price:                  $185 Million

Site Area:            7.7 acres

Vendor:                Molson Coors

Purchaser:          Concord Pacific

The goods:          Though not the largest deal of the year, this one certainly generated a lot of buzz in the marketplace, and is the only sale on this list that is not a residential land sale – at least based on current zoning policy. The sale closed on March 31 after being listed by Simon Lim of Colliers in 2015. The site is currently zoned M-2 which only allows for manufacturing/industrial uses and is still occupied by Molson on a leaseback basis until their eventual move. Details remain scarce on Concord’s future plans for the site, though it will almost certainly include a substantial commercial component.

#4 – 1444 Alberni Street & 740 Nicola Street

Price:                  $170.1 Million

Site Area:            43,300 SF

Vendor:               Wall Financial

Purchaser:          Landa Global/Asia Standard

The goods:          This full city-block located in the West End of Downtown Vancouver was redesignated as part of the West End Community Plan, adopted in early 2014. The site is currently improved with an office and apartment tower built in the 1970’s. Wall had acquired the site in March 2014 for $83.5 Million and subsequently sold through Simon Lim of Colliers after a bid process in late 2015. The sale closed in April 2016. It is expected that the property will be completely redeveloped with two 40+ storey condo towers.

#5 – Brighouse Square, 6340-6390 No. 3 Road, Richmond

Price:                  $73,500,000

Site Area:            3.6 acres

Vendor:               Sanna Enterprises

Purchaser:          YYH Development Ltd.

The goods:         Brighouse Square is a retail strip plaza at No. 3 Road and Cook Road across from Richmond Centre. The site sold as a potential future residential development play in May 2016 to a Chinese development group. It had been designated as ‘Urban Core T6’ in Richmond’s City Centre Plan to allow for mixed residential and retail. Simon Lim of Colliers acted as the broker in the off-market deal.

#6 – 1745 West 8th Avenue, Vancouver1745 West 8th Avenue

Price:                  $70,000,000

Site Area:           56,550 SF

Vendor:              CIBC

Purchaser:          Delta Land

The goods:         Our team marketed and sold this C-3A zoned, Fairview office building/development site on behalf of CIBC in late 2015, with the sale closing in February 2016. The site achieved 9 offers, with the successful buyer being Delta Land Development. CIBC is leasing the property back until mid-2017 after which time Delta will likely release plans for the property.

#7 – 1059-1075 Nelson Street, Vancouver

Price:                 $68,000,000

Site Area:          17,292 SF

Vendor:              Suncom

Purchaser:          Shan Gao

The goods:         In one of the more interesting sales in recent Vancouver history, this assembly of two non-descript walkup apartment buildings sold three times in just under two years in a series of events documented by Ian Young. Our team acted for Wall Financial in the original assembly and subsequent sale in January 2016. The site flipped in February 2016 for $68,000,000 to a Chinese buyer who remains generally unknown to the market.

1070 - 1080 Barclay_Sold#8 – 1070-1080 Barclay Street, Vancouver

Price:                  $59,000,000

Site Area:          17,292 SF

Vendor:              Two Private Local Investors

Purchaser:         Bosa Properties

The goods:        Just across the lane from #7 on this list, this assembly of two apartment buildings was listed by our team in late 2015 and sold after multiple offers to Bosa Properties. The site was also re-designated in the West End Community Plan to allow for towers up to 550 ft. (subject to shadowing). Bosa also secured the neighbouring strata building at 1060 Barclay. The deal closed in February 2016.

propertyfile-ashx#9 – 1818-1862 West Broadway, Vancouver

Price:                 $56,250,000

Site Area:          37,500 SF

Vendor:              Private Local Investors

Purchaser:         Suncom

The goods:        This assembly of lots on West Broadway near Burrard Street was sold by our team in September 2016. The assembled site comprises 300 feet of frontage and the existing C-3A zoning allows for up to 3.0 FSR residential with retail.

asdfas#10 – 1810 Alberni Street & 703-751 Denman Street

Price:                 $55,000,000

Site Area:          17,292 SF

Vendor:              Local Investor

Purchaser:         Landa Global

The goods:        This West End development site was sold by the Simon Lim team in September 2016 after a listing process. The Property is currently zoned C-5A (West End Commercial), which provides for 2.20 FSR with potential to increase density to 7.00 FSR, and by heritage density increasing up to 7.70 FSR. It is situated in Lower Robson Area A of the West End Community Plan – designation consistent with the amended C-5A Zoning (no rezoning required).

Honourable Mentions:

Below are a couple of notable transactions that formally closed in 2016, but we are not including as they aren’t technically relevant sale deals for the purposes of this analysis.

  • 508 Helmcken Street – this site, more commonly known by its project name “8X on the Park“, is part of a land exhange that was negotiated back in late 2012 with the City of Vancouver. The completion of the Jubilee House social housing replacement project triggered the land exchange so that Brenhill Development can move forward with the construction. The sale value was $83,500,000.
  • 1166 W Pender_Sold1166 West Pender Street – our team acted in this $71,400,000 sale, closing in April 2016. The site is currently improved with a 15-storey office building that the Purchaser, Reliance Properties, intends on redeveloping, though we have not considered it a pure land play as with the transactions above.

Some notes from the above list:

  • 9 of the 10 largest land deals in Metro Vancouver took place in the City of Vancouver
  • 8 of 10 were sold by market bid process (the other 2 were ‘off-market’)
  • 3 of 10 were bought by well-established ‘local’ development groups, the other buyers were offshore or ‘new-entrant’ development companies
  • 8 of 10 will require a rezoning process before development can occur

Market Update: Cambie Corridor Land Values

Below is a brief update to a previous analysis of land sales along the Cambie Corridor that was originally posted last year. The most recent project to launch pre-sales is The Regent by Regent International on the North side of West King Edward, which launched in July 2016, and having substantially sold out at over $1,000 per SF. Fully 13 of the first 15 projects to launch pre-sales since 2012 have sold out quite quickly and steadily increasing prices.

As one of the most consistently strong pre-sales markets in Metro Vancouver, land values are continuing to increase as developers are bidding more aggressively to reflect end-sales demand.

Up and down the Corridor, numerous land assemblies have occurred, with many rezoning applications at various stages of the process. Almost 20 sites have now had rezoning enacted; meaning they have been officially approved by the City, and over one-third of the 439 lots in the plan area have now been sold.

The following chart depicts all of the site/land assembly sales that have taken place within the plan area since 2009. As recently as 2014, land sales averaged $175-200 per buildable SF. Today, land values have escalated to as high as $250-300 per buildable SF, and a couple of sites have actually traded above the $300 per buildable SF threshold.

Cambie Corridor_Land Values_August 2016* based on approved density, or plan maximum where no application exists yet.

The strength of the Cambie land market is not entirely surprising given the strong pre-sales trends and given that land on the Westside with exisitng zoning for multifamily is now regularly trading above $400 per buildable SF.

Coveted 2.3 Acre Westside Site Sells for $46.2MM

A rare 2.34 acre piece of land located at Oak Street and West 18th Avenue has sold to Wesgroup Properties for $46,200,000. The property, which contains frontage on both West 18th and most of West 19th from Laurel Street to Oak Street,  is currently zoned RT-2 and is improved with 17 low-density rental apartment duplexes built in the 1950’s.

vanmap aerial

The site had been speculated for future redevelopment for some time and was only recently identified by the City as a potential rezoning location under the Cambie Corridor Phase 3 planning review given it’s current 0.75 FSR zoning and its proximity to transit. The scope or timing of a potential rezoning application remains to be seen.

The Inexorable Upward March of Land Prices

Just ask any developer; it’s becoming increasingly difficult to find sites to build condos or mixed-use developments in the City of Vancouver. Despite the buzz in the media about developers running City Hall, an burgeoning supply of single family land assemblies, and spot rezonings occurring all over the place, the vast majority of rezoning and development activity outside of Downtown Vancouver is presently confined to areas such as the Cambie Corridor and Southeast False Creek (“SEFC”), both of which are near transit and underwent lengthy master planning phases in the past 5-10 years to add moderate density; typically averaging 3.0 FSR or less. 15 of the 40 currently proposed rezoning applications in the City of Vancouver fall within these two areas alone. Furthermore, of the other 16 proposed rezoning applications that are located outside Downtown/Chinatown, none are for condo developments; none! The applications are all for market rental, social housing or institutional uses. Of course, this does not jive with the public perception that Vision Vancouver has granted spot rezonings for condo towers all over town, a view which does have some merit given pre-planning phase approvals for such developments as PCI’s Marine Gateway and Westbank’s Granville and 70th developments in the past few years. Nevertheless, more recent direction shows that the City has definitively pulled on the reins of both area plan policy work and speculative rezoning applications.

Outside of the Downtown, Cambie Corridor and SEFC areas, developers are facing scant opportunities to find land in a City that is becoming entrenched as a predominantly wealthy single family enclave with over 65% of land still dedicated to this lowest form of housing density that existed nearly 100 years ago. While City of Vancouver planning staff have made an attempt under Brian Jackson’s oversight to pursue gentle densification of various neighbourhoods in forms such as stacked townhouses and fee-simple rowhouses; it has been largely met with resistance by neighbourhood groups who, in many cases, oppose even the most benign forms of density that threaten the single-family neighbourhood ideal. Likewise, affordable housing activists have argued that $800K townhouses are not a solution, even in large areas where $2M houses are the only option for home-ownership. The end result is that positive planning processes such as that which commenced for Grandview-Woodlands in 2013 turn into endless community consultation and opportunities for redevelopment are deferred for several years.

In a time where rezoning and the public approval process in general is an increasingly contentious and politically sensitive endeavor, developers are fleeing to land where there is the least risk. And where is that? Pre-zoned land. Certain zoning types have become the primary target for many developers and investors over the past 5 years or so; including:

  • C-2 (mixed-use zoning on various arterials outside downtown)
  • C-3A (mixed-use zoning primarily in the Broadway/Mt. Pleasant areas)
  • RM-8 & RM-9 (new townhouse and 4-storey zones respectively. Marpole only so far)

Here is a quick look at sales of C-2 zoned properties in the City of Vancouver to show the effect of the aforementioned increase in demand for pre-zoned land.

For those unfamiliar with C-2 zoning, it is a commercial mixed-use zoning scattered throughout the City’s arterial streets (excluding Downtown). The C-2 zone allows a total density of 2.5 FSR and a total height of 4-storeys. What makes it one of the more sought after zones by developers is that it allows residential above the ground floor, and is found in wealthy established areas such as Dunbar and Kerrisdale, as well as emerging areas like Fraser Street and Kingsway. Existing commercial properties on any sites large enough to accommodate underground parking, and that do not have long-term leases in place are being snapped up all over the City.

C-2 Zone Land SalesThe sales show the difference in values between East Vancouver and the above-mentioned areas of the Westside, which of course support higher condo values and retail lease rates relative to East Van. More apparent however, is the increase in values city-wide. While previously averaging around $125 per buildable SF as recently as 2010, the average has now shot past $200 per SF, with recent trades in Kerrisdale well over $300 per buildable SF, and Main Street trades now being reported as high as $250 per BSF. $300 per BSF is a figure which is only supportable in an exclusive and already wealthy area that can justify condo sales approaching $1,000 per SF. The lack of available sites in these areas helps to create the exclusivity that supports the underlying sales, as opposed to areas like Cambie and SEFC where the areas have been, and still are, being inundated with new condo inventory. Speculation may also be a factor where investors are simply buying existing C-2 zoned income properties and holding them, but this has been less prevalent and is not included in the sales charted above.

The above price trend holds true for the C-3A zone, as well as other zones which allow the developer to proceed with only a development permit and avoid the lengthy rezoning process.

Land values for C-2 zoned properties and in other pre-zoned areas will continue to be in high demand for developers as long as the opportunities for rezoning remain limited as they are now, and as long as the City of Vancouver – both City Hall and it’s citizens, continue to support a future in which the majority of the City’s land area continues to be dedicated to a low-density, exclusive and unaffordable housing type – the single family home. Similar to single family lots, they aren’t really expanding these zones, and as they are redeveloped the supply diminishes while the demand grows stronger.