Record Land Prices Driven by Potential Higher Density
Land has become the dominant real estate sector in Metro Vancouver. This will likely dictate future property values and lease rates. Developers are driven by the potential of density increases, resulting in bids reaching unprecedented levels.
In November, CM Bay Properties paid $15.8 million for 15, 714 square foot old gas station site on the Cambie corridor, setting a new price-per-buildable-square-foot record at $402 according to Colliers International. CM Bay plans to develop a 12-storey condo and retail complex near the Oakridge-41st Canada line station.
Last year, the dollar volume in land exceeded $3 billion, constituting more money spent on commercial real estate in the Lower Mainland than office, buildings, shopping malls, industrial buildings, and multi-family rental property sales combined.
From 2013 to 2014, the dollar value in Greater Vancouver Area increased by 35.9% according to the Commercial Edge report. The average price per site was $4.7 million, but many were traded for much more.
Other indications that developers are drawn by potential density growth is the increase in purchase of land for residential projects, representing half of all Lower Mainland land sales, up from a third in 2013. According to Colliers, developers are focusing on low-rise wood frame condominiums and townhouses.
City plans encouraging a shift towards multi-family development has spurred land speculation along Kingsway Avenue south of King Edward Avenue. This has resulted in a land price increase of an average $46 per square foot over the past year.
Avison Young principal Bal Atwal says that “underlying land values have outpaced income values on properties along or near virtually every major commercial corridor in Metro Vancouver where land is designated for higher density uses.”