A 60-year old, three-floor, 23-suite walkup apartment building in Vancouver’s West End sold for $8.1 million, while a new four-storey, 80,000-square-foot office building in South Surrey; the 24,500-square-foot City Centre Square shopping plaza in Langley; and a brand new, 53,000-square-foot industrial building in Delta each sold for less than $6 million.
Sales of mostly older apartment buildings dominated high-value commercial real estate sales during the first half of 2015,… accounting for nearly 30% of the total dollar volume across British Columbia.
Why are these older apartments commanding such high amounts in todays real estate market?
Counting only property transactions in excess of $5 million, multi-family rental property sales tallied to $370 million, compared to $358 million for the second place industrial market. Retail sales were valued at $307 million, with office property sales lagging at $213 million in the first six months of this year, according to the B.C. Real Estate Investment Review from Avison Young’s Vancouver office.
The report implies that private investors, who make up more than 90% of all transactions, are simply parking cash in residential rentals.
“The acquisition of multi-family assets is now more about wealth preservation as opposed to earning a return or even acquiring a property with an eye to redevelopment,” Avison Young states.
The Avison Young study reveals the value disparity between the rental apartment market and what is traditionally considered prime commercial real estate.