Vancouver could see its first billion-dollar real estate sale in 2016 as the purchase of trophy properties push sales volume to an historic peak.
The expected sale of the Bentall Centre office portfolio and the Royal Centre office and retail tower this year “will push overall dollar volume to previously unseen levels,” according to Avison Young.
“Both assets will very likely set new benchmarks and may produce the first billion-dollar-plus commercial real estate transactions in Vancouver’s history,” Avison Young noted in a recent 2016 forecast said.
The current record price for a Canadian office tower is the $1.27 billion paid for the 68-storey Bank of Nova Scotia tower in Toronto, in 2012.
The Bentall Centre is made up of four office towers in downtown Vancouver. Its majority owner, Montreal-based Ivanhoé Cambridge Inc., put it up for sale last year. The four buildings range from 21 to 35 storeys and together contain 1.5 million square feet of office space and 53,000 square feet of retail.
The offering is expected to attract local and “global institutional investors” according to a statement from Arthur Lloyd, Ivanhoé Cambridge executive vice-president of office for North America.
Michael Gill, principal in the Avison Young capital markets division said he would not be surprised if Asian-based offshore investors were among those attracted to the Bentall Centre offering,
The Bentall 5 building was sold in 2012 for $400 million, or a $686 per square foot, to a group of Canadian pension funds. At that per-square foot price, Bentall Centre would be worth north of $1 billion, though most analysts believe it will sell for more.
Bids closed in December for Royal Centre at the corner of Burrard and West Georgia Streets, but no sale information has been released. Brookfield Office Properties’ sole asset in Vancouver covers 589,000 square feet, including a 37-storey office tower and 91,000 square feet of retail space. The property is assessed at $287.5 million but is also expected to have fetched a higher price. Word on the street is the property is under contract with a successful bidder.
Total commercial real estate sales through the first nine months of 2015 across the Lower Mainland reached a five-year high of $5.5 billion, up from $4.2 billion in the same period a year earlier, according to the Real Estate Board of Greater Vancouver’s commercial division.
