California medical device company Masimo Corp. (Nasdaq:MASI) will pay $123 million for digs adjacent to the new St. Paul’s Hospital on the False Creek Flats.
The deal works out to about $1,200 a square foot (not including GST), about 20% less than nearby projects, and a reflection of the fact Masimo is taking the entire building, located at 220 Prior Street.
“It was going to be marketed on a strata sale basis, so the building had been designed for smaller units but also with full-floor opportunities,” said Michael Buchan, a principal with Avison Young, which represented the vendor, Keltic Canada Development Co. Ltd. “Any time you’re looking at a larger-scale transaction there’s definitely going to be a different value than there would be, comparably, than doing smaller units and selling them individually.”
Strata office space in the False Creek Flats and the adjacent Mount Pleasant area is currently selling for $1,400 to $1,600 a square foot. Strata office space at Archetype, a mixed-use development by QuadReal Property Group and Hungerford Properties at 220 East 1st Avenue, is selling for $1,500 a square foot.
A confidentiality agreement limited what Buchan could say regarding Masimo’s purchase, but he noted that the property experienced strong interest even before formal marketing began. Ultimately, the deal with Masimo pre-empted a full marketing campaign.
“There’s been many groups who have followed up and, unfortunately we can’t do anything,” he said.
Keltic acquired the property, formerly home to a warehouse, for $25 million in 2019.
Masimo signed the deal February 14, according to its latest quarterly report, and Keltic officially broke ground on the 102,000-square-foot property on August 30.
Masimo paid an initial deposit of $21 million. The remainder of the purchase price, “subject to certain adjustments,” will be paid when the building completes in the second half of 2024.
Masimo anticipates to have 170 workers in the space when it takes occupancy in 2025. Its local staff currently work out of 17,500 square feet downtown, adding 13,000 square feet to its footprint at 666 Burrard Street earlier this year.
Masimo describes its core business as non-invasive monitoring of arterial blood oxygen saturation and pulse rate, with additional business lines including devices for blood constituent, brain and breath monitoring.
It is just one of a number of U.S. tech companies driving absorption in the downtown office market earlier this year, though the pace of deals has slowed in the latest quarter as rising interest rates weighed on business confidence. But many expect the tide to turn by the time projects such as 220 Prior complete.
“The announcement is great for Vancouver and the area,” Buchan said, noting that the location adjacent to the new St. Paul’s Hospital campus attracted interest from medical users as well as the tech sector. “There was quite a bit of interest from the tech world. A lot of interest from the life sciences world, as well as medical professionals, general office users and groups that really felt a synergy with what’s going to be created down there.”
Cushman & Wakefield senior vice-president Matthew Maclean said groups have been slow to decide on space at Archetype but interest remains strong. The ownership group behind Archetype is patient, and are confident demand will increase prior to the building’s completion in 2025.
The deal with Masimo underscores the long-term appeal of the False Creek Flats.
“It acknowledges that the new hospital is going to be throwing out lots of employment density,” he said.
St. Paul’s is currently scheduled to complete in 2026.
