Two premier downtown Vancouver office buildings have been listed for sale, marking the first major office towers coming to market since the pandemic. One of the buildings is fully leased to retail giant Amazon, increasing market interest in office values after hybrid and work-from-home drove office vacancies higher.
Oxford Properties, the real estate arm of the Ontario Municipal Employees Retirement System (OMERS), and the Canada Pension Plan Investment Board (CPPIB) have listed 402 Dunsmuir Street and 401 West Georgia Street, attached buildings which comprise an entire city block in the downtown core.
The 22-storey 401 W Georgia building was built in 1985 and houses four anchor tenants, including Aon Canada Inc. and BuildDirect.com Technologies.
The nine-storey, 152,000-square-foot 402 Dunsmuir building was completed in 2020 as an expansion of 401 W Georgia, with Oxford Properties custom building it for Amazon.com, Inc.
A company representative for CBRE, the Vancouver listing agents, said, “We have a very strict confidentiality agreement with Oxford and cannot speak publicly about the process at this time.”
Western Investor sources, however, estimated the two centre-ice location, Class A buildings could sell for a total of more than $300 million.
They may take some time to sell, however, in what one Vancouver commercial agent called “a tough market right now.”
Metro Vancouver office investment volume fell by 76 per cent in the first half of this year compared to the same period in 2022, according to Avison Young.
“There was little expectation that return-to-office mandates would encourage greater office usage. Furthermore, higher costs of debt have encouraged office users to cut their operating costs by reducing their footprints. As a result, vacancy – particularly in downtown Vancouver – was heightened at the end of June, hitting 12.3 per cent,” Avison Young explained in a first-half report released in July.
There are scant comparables so far this year to assess values.
The Evolution Block, a new industrial-office strata building of 104,000 square feet in False Creek was valued by the vendors at $68 million but sold in April for $57.5 million to U.S.-based Harrison Street Real Estate Capital. Platform 353, a 35,000-square-foot office-industrial strata building in Railtown, sold in the first half for $18.8 million.
“With reduced cash flow from tenants, office investment remained slow,” Avison Young noted in its British Columbia Investment Review H1202.
