"Industrial and retail properties have been top of mind for owner/operators and investors," said Avison Young associate Matt Thomas, but he added that a lack of new supply has frustrated potential buyers, especially for small strata units.
North Vancouver has among the highest industrial land values in the Lower Mainland, with average prices well above $1.5 million per acre. The industrial vacancy rate is a skinny 1.8 per cent.
With little new supply on stream and increased demand - some linked to shipbuilding contracts - the industrial vacancy rate is forecast to remain below 2 per cent this year.
Retail
The retail sector is also hot in North Vancouver, with lease rates in the $40 to $50 per square foot range and intense demand from investors. "Retail properties priced less than $2 million attract multiple offers," Thomas said.
Much of the action is concentrated along Lonsdale Avenue in North Vancouver city, but the District of North Vancouver has already rezoned for a new shopping district near the Second Narrows Bridge.
Lower Lynn Town Centre is a 20-year development proposal that would begin with high-density residential of about 650,000 square feet and 45,000 square feet of commercial space. Construction of the first of six residential towers - including two highrises - could start late this year.
Residential
As of the end of November 2011, the price of a typical detached house in North Vancouver was up 11 per cent from a year earlier, to $985,731, reports the Real Estate Board of Greater Vancouver. This is the fourth-highest price in the region, behind only West Vancouver, the West Side of Vancouver and Richmond. The typical North Vancouver condominium apartment sells for $380,075, unchanged from a year ago.
Meanwhile, apartment rental buildings are in high demand, with the average price per suite of multi-family rental properties soaring above $168,800 by the end of last year, according to a survey by HQ Realty Ltd.
Accelerating
Real estate developers see the spinoffs from the giant federal shipbuilding contract, awarded to Seaspan's shipyards in North Vancouver, as a catalyst for the commercial and residential sector. The $8 billion program will not only inject billions into the local economy, but it will create an estimated 4,000 jobs over the next eight years. In addition, the federal government has plans for a further 17 vessels, which Seaspan may be involved with.
Construction on the new vessels will likely start this year. In the meantime, over $150 million worth of infrastructure will be built at Seaspan's shipyards in North Vancouver and Victoria, while vessel design work is being finalized.
But Seaspan notes that the big contract is still in its very early stages.
John Shaw, Seaspan's vice-president of program management and the man behind the company's pitch for the National Shipbuilding Procurement Strategy (NSPS) non-combat vessel contract, said his company has yet to win anything.
"We have an $8 billion opportunity," Shaw said at his office next to the shipyard in North Vancouver. He cautioned that negotiations with the federal government have only just begun.
The non-combat contract includes new joint support ships for the Royal Canadian Navy, science vessels for the coast guard and a polar icebreaker.
Shaw and his team spent the better part of the last year developing a bid (at a cost to Seaspan in excess of $1 million) that proved to the federal government that it had the people, know-how, finances and space to build navy and coast guard vessels.
In addition to making a case for its own shipbuilding capabilities, Seaspan had to commit to supporting the greater marine shipbuilding industry in its bid.
That means the company has agreed to spend 0.5 per cent of each contract's value on one of three areas: human resources development, technology development and industrial development.
The first project for Seaspan will be the $150 million coast guard fisheries science vessels. But work on them won't begin for at least another year.
In the meantime, the company has ordered six new wood-chip barges to keep workers busy until NSPS work begins.
At the same time, Seaspan has launched a major recruitment drive to find the next generation of workers to fulfil its needs.
Jobs
Shaw said Seaspan's Vancouver shipyards in North Van would need an additional 200 workers by 2013, and then another 400 to 600 on top of that to support navy ship construction.
Talks are underway between Seaspan, unions and colleges to help the company source as many local workers as possible.
The province has also created a B.C. Shipbuilding and Repair Sector task force to help the industry determine what its labour needs will be in the coming years.
But not every worker will come from B.C.
Shaw said he expects the contracts will attract oilpatch workers from Alberta as well.
The contract, although positive for the industry, could affect the labour force at Seaspan's other North Vancouver competitor, Allied Shipbuilders.
Allied president Malcolm McLaren said the NSPS contract could mean that workers leave his company for Seaspan where there's guaranteed work for decades to come.
"Yeah that's an issue," said McLaren.
"As an employer it's our challenge [to answer], how do we compete with an outfit that looks like it has long-term work? On the other hand, if there's work available it means there's still usually room for more."
But McLaren added that the NSPS could mean more sub-contract or overflow work for Allied.
In Vancouver, the NSPS has already generated new work for Robert Allan Ltd., Canada's oldest privately owned consulting naval architecture firm.
The company is also bidding on the design contract for the polar icebreaker, which, if it wins, would mean more job creation for the 75-person firm.
Back on the North Shore, Percy Darbyson, business manager for the Marine and Shipbuilders local 506, said he's not entirely sure yet how the NSPS contract will affect his people.
The union's current contract with Seaspan is up for negotiation in 2013, said Darbyson, and he expects the company will want to hammer out a deal with workers sooner rather than later.
Shaw said the relationship between Seaspan and the union is strong.
Despite all of the work in front of Seaspan, Shaw said he's confident the company will overcome any obtsacles.
Said Shaw: "Will there be challenges? Of course there will, [but] the future is exciting."
from Western Investor January 2012
