Change of ownership of single-story retail properties along Richmond's No. 3 Road signals interest in Canada Line corridor
‘If you’re not developing along a transit line (that is within your community) you’re the exception:’ Ross Moore of CB Richard Ellis
For many commercial property owners in Richmond’s No 3. Road corridor, the time to sell has arrived, if recent real estate activity along the busy retail and commercial strip is any indication.
In commercial realtor Bal Atwal’s view, it kind of started with the sale of an IHOP restaurant at the corner of Park Road and No. 3 Road, which went for a price-per-square foot “that was pretty high,” and caught the attention of other owners, who’ve since decided to become sellers.
“It could have been just the start of a domino effect,” he said, describing the changeover in ownership in an area where there has typically been little.
The city’s desire is to see the conglomeration of strip malls evolve into a series of walkable, transit-oriented villages around Canada Line stations.
Atwal, a principal at Avison Young commercial realtors, said owners along the corridor are typically long-term investors who have held their property for generations in some cases. But land values have increased to the point where they compare the prices against the income they’re earning from renting their properties, and it seems like a good time to sell and redeploy their capital elsewhere, he said.
And with prices reaching a tipping point, Atwal said, they’ve found a ready supply of buyers who have been patiently waiting on a location where demand has always been high.
Among the transactions have been the $8-million purchase by Unicorn properties of the two-parcel strip mall at 3411 and 3471 No. 3 Road near Capstan Way in May of 2012, and the June 2013 sale of 3711 No. 3 Road for $7.1 million to a numbered company, according to research from RealNet Canada.
Then this year saw the sale in January of 5731 No. 3 Road — the offices of the Richmond Review — to another numbered company for $6 million and the blockbuster $69-million sale of a three-parcel, two-hectare assembly at the corner of No. 3 Road and Alderbridge Way to a company called Sunrise Developments.
Atwal noted that the property is all single-story retail now and generates some income, but it is also practically across the street from the Lansdowne Centre Canada Line station, in the heart of a high-density zone in what the Richmond Official Community Plan refers to as Lansdowne Village.
Richmond Mayor Malcolm Brodie said he doesn’t view the recent flurry of property sales as setting the city up for a next wave of high density-development, but a continuation of the interest in developing the corridor that has been building since it became certain the Canada Line would be built.
For the city, it has been a long-term plan to reorient Richmond’s downtown toward the Fraser River waterfront, Brodie said. It started in the early 1990s with the first prospect of rapid transit coming to the city, and continued through the decade as regional rapid-transit priorities shifted elsewhere.
That is in keeping with development across Metro Vancouver.
“If you’re not developing along a transit line (that is within your community) you’re the exception,” said Ross Moore, the national head of research at the commercial realtor CB Richard Ellis. “It’s really got to that point.”
He added that it is difficult to pinpoint “hot spots,” because so many transit-connected locations in Metro Vancouver are connected to some form of redevelopment plan. Marine Gateway under construction at South West Marine Drive and Cambie Street and the redevelopment plan for Oakridge Centre are two examples in Vancouver.
“But these things take time,” Moore added. “You need to see the sales, you need to see the successes. You’ve got to get the lenders comfortable, because there is always a lender involved.”
In Richmond, some of the recent property purchases will turn into redevelopment projects in the short term, but many of the investors are patient and have deep enough pockets to wait out the current business cycle for a new round of development to begin, Atwal said.
Richmond has seen a surge in housing construction this year, with developers starting work on 1,143 units, mainly condos, which is not far off the city’s total of 1,427 units in all of 2013. That followed a year of 1,708 housing starts in 2012 and its recent peak of 2,636 units in 2011.
“I think you’ll see some development in the next couple of years along No. 3 Road, and then probably a bit of a pause until the units in those developments have been absorbed,” Atwal said. “Then possibly a new benchmark for pricing in residential units is accepted by the market, (and) you will see the next wave of development.”
BY DERRICK PENNER, VANCOUVER SUN JULY 29, 2014
Photograph by: Mark van Manen , PNG