The first speculative developers on Vancouver鈥檚 False Creek Flats may be the last to see land prices at less than $500 per square foot.
It is a lesson that could be carried into Vancouver鈥檚 historic Railtown area.
The flats, 450 acres roughly bounded by Main Street, Prior Street, Knight Street and Great Northern Way, is zoned for industrial and commercial use with only a tiny amount set aside for residential, most of that housing to accommodate students at the new Emily Carr University of Art and Design.
The lack of housing on the flats was intentional from the get-go, according to 麻豆传媒映画Mayor Gregor Robertson, who has defended reserving the flats primarily for workspace, not living space.
The zoning was expected to shelter commercial developers from the soaring land prices that characterize city neighbourhoods that have a potential for high-density residential.聽
But that may not work out as planned.
False Creek land zoned for industrial and light industrial use increased in price by at least 48 per cent in the past year, according to a study by Andy Yan, director of Simon Fraser University鈥檚 City Program.聽
In many cases, land prices have doubled.
鈥淥ur clients got in ahead of it,鈥� said Blair Quinn, executive vice-president of CBRE Canada.聽
His clients, PCI Developments and Low Tide Properties, bought 565 Great Northern Way, a 1.85-acre site in the flats, in 2016 for $34.6 million, or $430 per square foot.聽
BC Assessment now values the site at $72.1 million.
PCI and Low Tide plan to build a 160,000-square-foot, seven-storey office building, with Class A space aimed at the city鈥檚 burgeoning tech industry.
It is the first multi-tenant office building in the area in 18 years, and the first of more than 1.9 million square feet planned to be built in the flats by this development team alone.聽
Already 72 per cent leased, Quinn said takeup of the office tower has 鈥渟urpassed all expectation.鈥� Quinn did not release lease rates, but said they would be lower than Class A office space downtown, which average north of $45 per square foot.聽
Current tenants include Finning International, the world鈥檚 largest dealer of Cat equipment and once owners of the land.聽
Finning is moving its global headquarters from downtown 麻豆传媒映画back to False Creek Flats, occupying 29,000 square feet in the new building. Blackbird Interactive Game Studio will be leasing 29,000 square feet, with Spaces, a co-working space, leasing 39,000 and Samsung, leasing 20,000 square feet.聽
Quinn said PCI and Low Tide plan to start on a second phase of 300,000 square feet of commercial space at the site by mid-2019.聽
Railtown on commercial developers' radar聽
Jake Luft, a senior associate with Avison Young in Vancouver, said a rush of commercial development applications have followed the city鈥檚 approval of False Creek Flats. 鈥淭here鈥檚 a lot of land there that鈥檚 ripe for redevelopment.鈥澛�
Land for office development is rare in Vancouver, which explains the demand and rising prices for sites in both the flats and in neighbouring Mount Pleasant, where a 3.0 floor-space-ratio density is now allowed.聽
Two recent sales highlight the latter: a 12,573-square-foot site was bought a year ago on West 7th by Rendition Developments for $9.5 million; and an 18,400-square-foot site on Yukon and West 6th was purchased by Chard Development in December for $20.4 million.
Both sites are being developed as light industrial and office space over four floors.聽
The next hot spot could be Railtown, Avison Young detailed in a recent Metro 麻豆传媒映画office market report.
Much of Railtown, an aging industrial enclave just above the rail tracks and port in the Downtown Eastside, now has zoning similar to Mount Pleasant.
At least three new mixed industrial and office projects are planned for Railtown, totalling more than 250,000 square feet.
These include a seven-storey, 152,000-square-foot office and industrial complex designed for technology companies, by Omicron and Rendition. Being built on the site of an old boiler factory, it received city permit approval December 17, subject to conditions.聽
At 353 Railway, a six-storey, 35,000-square-foot building is planned by Rendition, which originally applied for permits in 2015. Now approved, it is expected to break ground this year and complete in 2019.
