There was a record high $140M in industrial dollar volume in the City of Vancouver last year, largely the result of zoning changes in Mount Pleasant that have triggered a significant transformation in one of the city's last industrial nodes.
Avison Young VP Struan Saddler tells us the zoning amendments allow for retrofitting of existing buildings in Mount Pleasant (to increase rentable area), or outright demolition of older structures, replaced with facilities that better maximize site coverage, “tapping into the highest rental rates achievable." While retrofitting is an option, the higher pricing established in recent sale transactions in Mount Pleasant makes it less likely older buildings will be retained, says Struan. This is turning industrial transactions into land deals, with tech firms and lighter industrial users competing with private investors and developers for scarce assets.
It’s happy days for the owner-users that have occupied buildings in Mount Pleasant for nearly half a century. They’re being wooed by software developers, retailers and wholesalers that are “more capable of producing higher revenues and are able to compensate landlords for the higher yields they’re expecting,” says Struan. “The zoning amendments are making it a lot easier for these true office users to come into this hipper industrial area.” HootSuite brought much attention to Mount Pleasant's post-industrial potential when it moved into a 33k space there in 2013 (a meeting room at its HQ is seen above—Big Owl is watching you...).
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Elsewhere in the city, a lack of industrial assets and land on which to build has led to a decline in deal volume. Onni Group had one of the biggest buys of the year, acquiring 888 SE Marine Drive for $17.5M (the revamped building is seen here). But Struan tells us that overall deal flow is being hampered by owner-users situated at the edges of rezoned parts of transforming areas like Mount Pleasant; they’re holding off selling in the hopes that zoning changes will come to their areas next, enabling them to unlock greater value by selling the sites off for mixed-use redevelopment: “They’re thinking 'here comes the money train.'”
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