Why the real estate industry is closely watching the sale of two Vancouver office towers
An attempt to sell of a pair of office towers in downtown Vancouver is being carefully watched by the commercial real estate world, and not just because Amazon.com Inc. is one of the primary tenants.
The Canada Pension Plan Investment Board and Oxford Properties, the real estate arm of the Ontario Municipal Employees Retirement System, are reportedly planning to unload the neighbouring towers on Dunsmuir and West Georgia Street, according to a Bloomberg report on June 27, which said the sellers hope to fetch $350 million.
Ray Wong, vice-president of data solutions at Altus Group, a provider of asset and fund intelligence for commercial real estate, said the sale and rumoured price tag are attracting a lot of attention because the prime office complex is on the block as the broader office market across the country struggles in the face of rising interest rates and persistently higher vacancies due to remote work.
If the Vancouver complex trades hands below expectations, market watchers say, it could trigger a ripple effect across the market.
“That’s going to be the real test of where the office values are,” said Wong. “It is a brand-new building, right downtown, close to all the amenities, great tenant — so it’s going to be interesting to see what type of sale price that building goes for.”
Sales of premium office buildings have been scarce of late, especially since the U.S. banking crisis brought deeper scrutiny of the commercial real estate sector earlier this year. Publicly traded office holding have already seen their values plunge on speculation that sector is in trouble, but private and institutional investors have yet to take the same writedowns, in part because of a dearth of comparable sales from which
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