$700 Million for Hudson’s Bay
VANCOUVER — When it comes to commercial real estate in the Lower Mainland, the mantra seems to be “go big, or go home.”
Metro Vancouver has a new commercial real estate mega deal to add to several recent acquisitions seeing sky-high prices.
Reuters reported on Monday that the Canadian department store Hudson’s Bay and venture partner RioCan REIT have signed “a conditional agreement” to sell its flagship store on Granville Street to an undisclosed Asian buyer, “who owns a closely held real estate company,” for a purported $675 million.
Peter Anderson, a solicitor in commercial real estate at Boughton Law, who is not involved in the department store deal, but works for a dozen landlords who either own or operate large and small commercial properties in Vancouver, said the deal could be a sign the company needs to “unlock” capital to stay competitive with other large online retailers like Walmart, which tend to be in suburban areas where rents are lower.
Hudson’s Bay, Anderson explained, is one of the few blocks of land in downtown that don’t already have office towers or condos on site. It would be a prime site to be developed into a “higher use” property with larger buildings. If they did redevelop, he said, it would be worthwhile to keep the heritage façade of the existing building.
StarMetro reached out to Hudson’s Bay Company, but the company declined to comment on what it considers “rumour” and “speculation.” But reports last year point to the company’s failure to generate sales. The company lost $243 million in the third quarter of 2017.
The company’s latest plan to sell its downtown real estate is part of a string in the past month of several record-breaking commercial purchases and leases in Metro Vancouver. This in an environment where commercial vacancies have dropped to an “all-time low.” According to the commercial real estate firm CBRE, Metro Vancouver’s vacancy rate will drop to 1.4 per cent by the end of this year.
Stefan Morissette, industrial vice-president of Colliers International in Vancouver, represented Daiya Foods in signing a lease for a 400,000 square-foot facility in Burnaby, making it the largest industrial lease in 2018. He said there are very few options for industrial spaces in the current low-vacancy climate.
“I have a client that wants 40,000 to 50,000 square feet right now, just general warehouse space nothing special, and I’m struggling to find them property across all Lower Mainland markets, because of small handful of options.”
Morisette said Daiya Foods, which is owned by the Japanese company Otsuka Pharmaceutical Co., said the company was initially looking for a 200,000-squarefoot space. But the lack of options, and their long-term plan to grow made the company consider the bigger space.
“I have encouraged them to look at a slightly larger facility with the opportunity to sublet out a portion of it. I’ve actually had a number of clients in the last 12 months do that.”
Last month, Hungerford Properties also announced the acquisition of two large industrial sites in South Vancouver with a combined 675,000 square feet of space on Marine Drive, making it the largest industrial land deal in a decade worth an undisclosed amount, said Michael Hungerford, a partner in the company specializing in commercial and residential properties.
Hungerford said the company will work with the city to “intensify land use,” and expects to see mixed-use commercial developments.
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