An entire city block is up for grabs for $28-million in Vancouver’s upscale Kerrisdale neighbourhood, providing a glimpse into what a difference zoning makes when determining land values.
Since HQ Commercial posted the listing late Friday night, it has created a buzz in the city’s real estate circles. The asking price for the commercially zoned “C-2” block works out to $357 a square foot of buildable space or $893 a square foot of land.
David Goodman, a principal at HQ Commercial, expects the Kerrisdale property will attract bids from developers interested in constructing a four-storey condo complex after demolishing the five aging two-storey rental buildings on the site.
The assessed value of the entire property totalled $15.9-million on July 1, 2013, according to BC Assessment. The city block has enough room to fit in 10 single-family detached homes if they each were to have skinny 26-foot frontages. But the $28-million asking price reflects HQ Commercial’s belief that the land will be attractive to developers who could design ground-floor businesses such as a grocery store and restaurant, while saving the top three floors for condos.
Industry experts say that demand from new arrivals migrating from other provinces and countries, notably China, are part of the reason real estate prices have soared over the past 15 years. But on the supply side, Mr. Goodman is scratching his head and wonders why the City of Vancouver has effectively placed a moratorium in recent years on demolishing old rental apartments, unless a site happens to be already zoned like the Kerrisdale block for commercial development.
Mr. Goodman said the Kerrisdale property sale isn’t a case of renters being cast adrift unfairly in future because the tenants used to be suite owners as part of a co-op arrangement dating back many years. There are 44 units spread over the five buildings on the site, including 14 one-bedroom suites and 30 two-bedroom units. Many residents received premium prices for agreeing to relinquish their units for more than $350,000 each, while those who owned larger suites fetched the most money.
Disagreements over land use in Vancouver have led to delays in bringing on new housing, which in turn restricts supply and puts upward pressure on real estate prices, experts say.
Just a stone’s throw away from the Kerrisdale property is a stretch of land that is part of Canadian Pacific Railway Ltd.’s right-of-way for a now-abandoned freight route known as the Arbutus Corridor. The City of Vancouver’s zoning for CP’s 11-kilometre path is for a transportation corridor. By that definition, Mayor Gregor Robertson reckons that the railway’s property that snakes through some of Canada’s priciest neighbourhoods is worth perhaps $20-million in total. That works out to $10.68 a square foot – the City of Vancouver’s low-ball offer to CP.
Hunter Harrison, CP’s chief executive officer, figures a more realistic value would be at least five times higher to total $100-million at a minimum, or beyond $400-million on the higher end of the appraisal range based on adjacent land. CP recently took out full-page newspaper ads, featuring an open letter from Mr. Harrison to press his case that the City of Vancouver is trying to acquire the right-of-way for a song.
Some observers are puzzled by Mr. Robertson’s opposition to developing the Arbutus corridor while he supports increased density elsewhere, such as laneway houses popping up all over the city. Those are the small homes built next to alleys in the spot where the garage would normally be located.
The Arbutus Corridor is a good case in point to highlight the difficult and sensitive nature of what to do about vacant land in a city starved for development space. Many Kerrisdale residents want civic leaders to preserve the lengthy strip of track as a greenbelt for the foreseeable future. Civic officials have mulled over the possibility of using CP’s right-of-way in the long term for passenger light-rail transit, but so far, have ruled out zoning for residential development.
VANCOUVER — The Globe and Mail
Published Tuesday, Sep. 30 2014, 5:00 AM EDT