Article courtesy of Real Estate Board of Greater Vancouver, Commercial Market News, February 2012

The BCREA Commercial Leading Indicator (CLI) rose for the second consecutive quarter, advancing 1.1 points to an index level of 111. On a fourth-quarter over fourth-quarter basis, the CLI moved 1.6 per cent higher in 2011. While this is a marked slowing from the 5.2 percent surge in 2010, the index picked up considerable momentum in the third and fourth quarter of the year, more than making up for a weak first half of 2011.

The trend in the CLI turned up slightly as early softness in economic activity was smoothed out by a stronger second half of the year. This change in trend indicates a positive economic environment for the BC commercial real estate sector in 2012. “Improving economic data provided a strong tailwind for the CLI in the second half of 2011,” said Brendon Ogmundson, BCREA Economist. “However, growing anxiety surrounding the global economy could constrain the economic environment for commercial real estate this year.”The full BCREA Commercial Leading Indicator index is available at:

Francine Tracey


Reported by,

Audrey McKinnon

A group of Denman Street business owners are giving their landlady seven days to reconsider their disproportionately high rent or they may have to leave the building. They are requesting that she agree to fair lease rates and longer lease terms.


"We're fighting for our block," says Joseph Mireault, Eyeworx owner since 2007.


The business are located between 1110 and 1124 Denman Street. Landlady Elaine Owyang, who could not be reached for comment, charges from $78 per square foot to almost $120 per square foot, depending on the business, while market value in the area is $50-$65 per square foot.


"In my opinion that's way above market," says Colliers commercial realtor, Sherman Scott. He adds that more mindful landlords will charge a low enough price in order to keep long-term tenants. But Scott says that high rent is not the only factor of business failure. Inexperienced business operators might be tempted by Denman's high profile, but aren't prepared to run a business successfully.


The beach side block has three commercial spaces for lease. Roentgen, a clothing store, Qoola Yogurt & Fruit, and Cookies by George were all occupants. Qoola closed on September 25th "due to the incredibly high rent" according to the moving notice posted on their door.


Mireault, who says that the street has been labeled "Deadman Street," says that after rent and taxes, there's nothing left for business operators. "If tenants are working and the money that they're making only covers . . . property taxes, operating expenses, rent there's nothing left over for you . . . You're working for the landlord," says Mireault.

Falafel King, for instance, would have to sell close to 750 shawarmas a day to cover nearly $6,000 in rent plus operating costs for the 500-square-foot space.


Mark Kenna is the former owner of Obsessions, which previously occupied the corner building two years ago before Roentgen. He says Owyang was unwilling to negotiate and wanted to increase rent by 30% before the Olympics while Kenna and his business partner had been struggling to keep their eight-year-old business afloat.

Obsessions went bankrupt as a result. "We should have gone to arbitration for it, but we just had so much on our plate," he said. Nobody in the building has gone to arbitration yet, which is the primary legal recourse available to commercial tenants in this situation.


"When she turns on you, she turns on you," said Kenna, adding that Owyang would refuse to speak English during a disagreement. He thinks the rental issues are not just a problem for that building alone and believes that the entire street suffers for it.


But Nariman Moshfeghi, Pit Stop owner, notes that many of his neighbouring businesses two blocks west have changed ownership up to eight times in the 14 years his store has been in business. He blames it on high rent and slow sales from late October through February. "Two to three months, you barely make your rent," Moshfeghi says.


"If it's cold nobody comes out." Robin Delany, who established his first Delany's Coffee on Denman Street over 18 years ago, says that the location is the most seasonal out of the five Delany's he has opened. He says the rent is also a challenge for all businesses in the area: "We're paying less than across the street, but we're all paying a lot."


"It's a big joke," says 17-year Delany's employee Barbara Wychopen. "How long will they last? We always ask that question.

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Long considered a seedy strip, Granville Street is gentrifying, and its new condos could transform Vancouver''s entertainment scene
By Charlie Smith,

Waide Luciak has seen Granville Street go through plenty of ups and downs over the past quarter-century. When he bought the historic Yale Hotel shortly after Expo 86, it was on one of Vancouver’s seediest strips. This was before luxury condos were constructed across Yaletown, before the creation of the city’s entertainment district, even before Hong Kong–based billionaire Li Ka-shing built his first shiny high-rise on the north shore of False Creek.


In those days, the 900-to-1300-block stretch of Granville Street was Vancouver’s version of the downtrodden Parisian neighbourhood of Pigalle. Most noteworthy for its street kids, prostitution, porn shops, and occasional biker hangout, it was then known as Downtown South.


In an interview with the Georgia Straight inside the Yale’s blues bar, Luciak recalls doing a brisk business in the first five years of owning the hotel, before things started to wane. “We noticed that over the years, the business really became a little bit slower and slower,” he says.


Meanwhile, down the street, the Commodore Ballroom ran into severe financial trouble in the early 1990s, eventually forcing out its popular owner, Drew Burns. It was a far cry from the Granville Street of today, which is home to trendy restaurants, funky retailers, crowded nightclubs, and a growing number of street festivals.


Last month, Vancouver city council approved the Telus Garden mixed-used development, which will include a 45-storey residential tower in the block bounded by Seymour, West Georgia, Richards, and Robson streets. This will add more people to the neighbourhood. At the southern end of the strip, next door to the Yale, Rize Alliance is building a 187-unit, 23-storey tower. Across the street and behind the Best Western Hotel, Cressey Development is proceeding with a 193-unit, 32-storey development called Maddox.


That’s just the beginning. The city also plans to remove the “Granville loops”—two on-ramps connecting Pacific Street to the bridge—which will free up land for a new streetscape and new high-rises. That’s in addition to the Mark, Onni Group’s 47-storey residential tower being built behind the Yale on Seymour Street.


“Great public streets need population supports—they need anchors on either side, to move people back and forth,” the city’s director of planning, Brent Toderian, tells the Straight over the phone. “There is a lot of learning over generations in North America on how to make a great street like Granville work. Telus [Garden] and the Granville loops are an important part of that.”


All this follows a $20.8-million facelift to Granville Street completed just before the 2010 Games. This resulted in wider and fancier sidewalks, new lighting, and a rejigging of the block north of Smithe Street to create a public plaza.


“The Olympics, of course, transformed the perception of Granville Street and its role within the downtown,” Toderian points out. “It became more than ever the living room of the downtown. So we want to do everything we can to enhance that with additional population in the area.”


The executive director of the Downtown Vancouver Business Improvement Association, Charles Gauthier, tells the Straight by phone that buskers on the street, including rapper Marc Stokes, have injected an urban flavour. He adds that the VIVA Vancouver program, which transformed part of the road space into a pedestrian zone this summer, also lured more people to the area. “We get a lot of inquiries from people who want to do festivals and events on Granville Street,” Gauthier says.


He sees potential for conflict in the future between new residents and what he calls the "night-life economy." However, Gauthier adds that the clubs at the southern end of the strip where much of the development will occur, such as Ginger 62 and the Morrissey, have a different energy than those north of Nelson Street.


Meanwhile, Vancouver retail consultant Phil Boname says Granville Street was held back for many years because city planners decided to create a pedestrian mall and transit corridor without vehicular traffic, which was modelled on a similar experiment in Minneapolis. “We have found in many of our studies that converting a downtown street into a transit corridor does not necessarily work for the advantage of commercial interests,” he says by phone, quickly adding that this approach also doesn’t create a “social success”.


In 1997, Boname wrote a report for the City of Vancouver recommending several changes to breathe new economic life into Granville Street. He says he’s pleased to see more mixed-use development, but regrets that the city didn’t embark on a design competition to create a “glamorous” gateway at the bridge head into downtown. At the same time, he believes that the Canada Line, which was completed in 2009, will lure more major retailers to the strip.


“The corner of Robson and Granville will become increasingly powerful,” the consultant says. Then he tosses in a prediction that the Sears store will vacate this location within five years because its sales-per-square-foot ratio isn’t high enough to justify remaining in such a prime spot.


Sherman Scott, associate vice president of retail with Colliers International in Vancouver, tells the Straight by phone that lease rates are increasing along Granville Street. But they're still significantly lower than along Robson Street, where some are paying $200 per square foot.


"The highest deals I've seen on Granville Street are around $60 a square foot," Scott says. In an aside, he notes that he has never in his life seen so many vacancies on Robson Street.


Back during the slow times on Granville, Luciak had to make some changes to ensure the survival of his business. His son Joe became music director, with a mandate to bring in bands that attracted a younger clientele. Luciak then devoted his time to buying the Cecil Hotel next door in the 1300 block, with the intention of selling the entire site to a developer. This would give him a second prized liquor-primary licence and provide him with an opportunity to modernize the old blues bar.


His timing was impeccable, coming just before Granville began its revival. Vancouver city council let Luciak sell the “air rights”—unused density on the site—to Rize to enable it to build a taller tower. In return, Rize was required to preserve the Yale Hotel, refurbish its 43 low-cost housing units, and turn them over to the city. As part of the deal, Luciak demanded that his family would continue operating the blues bar after it was made more earthquake-proof.


“They could have knocked it down,” Luciak says, “but they worked with the city to preserve it. In fact, that was why I went to Rize. I knew that they were a developer that appreciated heritage buildings and that had, in the past, done this sort of development where they would preserve the old building and use the density next door.”

In the meantime, the Luciaks won the city’s approval to move their liquor licence from the Cecil to 1050 Granville, where they will open a new nightclub. “We love live music and we love producing shows,” Joe Luciak explains. “So what we’re doing is a kind of New Orleans meets Vancouver, kind of a Mardi gras seven nights a week. We’re going to be a great little daytime pub-restaurant, and by night we’ll have a mixture of live and electronic music—a real eclectic mashup of culture and creativity.”


They’re moving into a crowded area. One of the pioneers in creating the entertainment district, Blaine Culling of Granville Entertainment Group, says over the phone that when he opened the Roxy 24 years ago, he never expected that he would look across the street to the south and see a Le Château store. “We’ve seen a lot of changes over the years,” he tells the Straight. “It’s not viewed as a street to be afraid of, or anything like that. It’s a fun street, an interesting street.”


Granville Entertainment Group owns the Comfort Inn at Nelson and Granville streets, so it won’t have to cope with higher lease rates. Culling predicts that a major restaurant chain—such as Cactus Club, Earls, or the Keg—will appear on the strip.


“I think it’s Cactus that will make the move first,” Culling says. “It’s a couple of years away, but it will happen.”

In the meantime, other dining establishments have demonstrated some staying power. They include Glowbal Group’s Sanafir, with its Middle Eastern–themed décor, the Donnelly Group’s Granville Room, and SIP Resto-Lounge and the Refinery, which are owned by Peter Raptis and Raymond Staniscia.


Culling says there are already enough liquor-primary seats on Granville, and he’s concerned about the restaurants converting part of their operations to compete with the nightclubs. In 2009, the Donnelly Group persuaded city council to allow it to convert 38 food-primary seats into liquor-primary at the Granville Room, even though there were already 1,373 licensed liquor seats in the 900 block. At the same meeting, council also voted not to allow any other food-primary locations to convert their seats in the same manner.


Sitting in his elegant second-floor Refinery restaurant in the 1100 block of Granville, Raptis tells the Straight that he doesn’t think this is fair. “I think Granville Room, Sanafir, and SIP are just natural lounge-type places,” he says. “I don’t think any of them will stop serving food or change their focus.”


Raptis says there has only been one 911 call to police from his establishments, and that only pertained to something happening outside on the street. This track record, he insists, shows that he runs a safe operation.

These days, Raptis is feeling a sense of pride after winning an award from Tourism B.C. for his company’s environmental record. His wife is a teacher, and he says he caught the sustainability bug after visiting her classroom to speak to the kids. He expected them to pepper him with questions about chefs like Gordon Ramsay, and the amount of swearing that occurs in restaurant kitchens. Instead, students wanted to know about his company’s environmental practices.


“I really firmly believe that those children in that particular classroom are a snapshot of who our future customers are and what their future wants and needs are going to be,” Raptis says.


He suggests that this same environmental ethic is also persuading more people to live downtown and drive less. This is contributing to a more diverse group of people coming to the entertainment district. “It’s still a challenge,” he acknowledges, “because I think people perceive Granville Street as a bit of a party destination, as opposed to a place where you can go and have a nice meal.”


The marketing manager for the Yale, Stella Panagiotidis, has been on three Downtown Vancouver Business Improvement Association committees, including one dealing with Granville Street. In an interview outside the Blenz shop at the corner of Granville and Davie streets, she tells the Straight that she likes the area’s “gritty edge”.

“It’s got the cheap pizza joints and the erotic shops,” she states. “Maybe that will always be a part of what defines the character of Granville.”


In the middle of the interview, an older panhandler approaches and asks for change. She suggests that the street might also always include people like him—and that doesn’t bother her in the slightest.


The nearby Best Western Plus Chateau Granville has been upgraded, and it now includes the swanky Edge Social Grille & Lounge. It’s another sign of creeping gentrification, which will only intensify with the addition of more high-rises further to the south. Panagiotidis points out that the Scotiabank Dance Centre across the street and the nearby Vancity Theatre on Seymour Street have brought more artistic types of people into the area, as well.

“We may see a change over time—less cheap, fast-food takeout shops and more higher-end dining,” Panagiotidis admits. She quickly adds that the skateboarders and punk rockers might continue to gather on the street. But with the closure of the Yale blues bar for more than a year, she’s going to have to pound the pavement and find another job. “I’ll be exploring other options,” she says.


The Luciaks, on the other hand, plan to remain on Granville Street for the long haul. They’ve seen the bad times—and they’re in no mood to leave now that the neighbourhood is turning the corner.

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By Peter Mitham

January 10–16, 2012


Burnaby’s year?

Colliers International says growing interest in suburban office space may bear fruit for landlords this year if numbers regarding the market’s standing relative to Vancouver are any indication.


Tours of office space last year were common occurrences, but few companies made the move.


“There’s very little movement that took place in 2011 when there was a lot of interest and a lot of tours,” Courtney Markle, research director for Colliers in Vancouver, said last week. “We predicted that they would make more movement than they have. It’s difficult to be accurate in that forecast.”


The numbers are clear, however: The per-square-foot net rent for triple-A space in downtown Vancouver averages $33.92, up 43.1% from five years ago. C-class space is up 48.7%. Rents in Burnaby,  meanwhile, are half what they are in Vancouver and have risen just 30% over the past five years.


“With the rare differential and limited spaces available, tenants are becoming frustrated and beginning to look elsewhere,” Colliers reported. “If there is ever a time when companies will consider a move from downtown to the suburbs, it will be over the next two to three years, until downtown new supply is delivered.”


Restless companies eyeing Burnaby include the back office departments of banks and financial institutions – HSBC plans to consolidate a portion of its staff at the Broadway Tech Centre later this year – as well as pension funds, foresters and miners.


Colliers reported that Metro Vancouver office vacancies ended the year at 7.4%. Downtown Vancouver

vacancies are running at 3.5%, while suburban vacancies are at 11%. All areas reported slight increases

in vacancies, Colliers said.


Whistler opportunities

BC Assessment reports that valuations on properties in Whistler have dropped an average of 15% from

a year ago, a phenomenon consistent with what Rob Palm, executive director of the Real Estate  Association of Whistler and a broker with the Whistler Real Estate Co., has seen on sold properties.


One-bedroom properties are now available from about $295,000, whereas a year ago the starting price

would have been $350,000. Similarly, a two-bedroom unit is available from $400,000, not the $475,000

buyers would have been looking at in 2010.


The drop has spurred sales activity, which has helped whittle down listings. There were 550 sales in 2011, up from 462 in 2010 and not far from the five-year average of 569 sales. Sales of condos and townhomes have been particularly strong, increasing 39% and 20%, respectively.


But anyone looking to the Olympics for an influence will come up empty. “I don’t think that the Olympic factor was as much of a factor as people thought it would be,” Palm said, while not discounting the role infrastructure such as highway improvements have played.


But the highway has merely helped traffic flow between Whistler and Vancouver, from whence 65% to 70% of buyers hail. And what they’re coming for is the value.


Many have cashed out of Vancouver and North Shore properties, Palm said, and used the proceeds to downsize in Vancouver while buying a primary residence in Whistler – often a chalet, townhome or two-bedroom apartment.


"We’re probably more affordable today than a lot of markets, and they’re starting to see the value,” Palm said of buyers.


Crowds, not clouds

Preparations for the release this spring of units in Canada House at the Village on False Creek (formerly known as Millennium Water) are under discussion. But if a new year underscores anything for the muchmaligned development, which remains a hot political potato, it’s the attraction the place had for revelers welcoming 2012.


A couple of hundred people lined the waterfront at midnight, watching fireworks spark off the Plaza of

Nations. A lone trumpeter played a sad reveille for the dawning year as party yachts steamed by.


While not apparent from West First Avenue, the activity was a vindication of marketer Bob Rennie’s proclamation last February that the cloud over the Olympic Village was finally lifting.


The village is a ghost town no more, with all but the presentation centre – or 91% – of commercial space leased to long-term tenants, and 70%, or 452 of the 644 available units sold.

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Commercial Bond Yields


Canada Mortgage Bond

Canada Housing 06/15/17*: 1.91%

Canada Housing 03/15/22: 2.60%

* denotes interpolated rate


Select Government of Canada Bonds

CAN 4.00 06/01/17: 1.58%

CAN 2.75 06/01/22: 2.16%

GOC Bonds are for reference purposes only


First National Floating

Insured Cost of Funds



Bank Prime Rate



Posted Rate

1 Year: 3.20%

2 Year: 3.55%

3 Year: 3.95%

4 Year: 4.64%

5 Year: 5.44%


Market Commentary 

The federal budget didn’t contain any surprises so the markets are taking it in stride.


Canadian GDP expanded slightly in January, but at a slower rate that in December. January saw a 0.1% increase, led by manufacturing. Financials also did well. The construction sector saw a 0.1% decline.

December 0.5% growth, revised upward from 0.4%.


In the U.S., personal income increased 0.2% in February while personal consumption expenditures climbed 0.8%. Real disposable income dropped 0.1%.


The confidence of American consumers improved in March. The Reuters/U of M Index climbed nearly 1 point to 76.2, from 75.3 in February. While not optimistic, pessimism is fading in the face of the improving job market in the U.S.


And the Chicago Purchasing Managers Index dropped more than expected in March to 62.2%, down from 64% in February. Expectation had been for 63.6%. Production and new orders rose, but the new orders component decelerated to 63.3% in March from 69.2% in February. Employment fell near 8 percentage points and the prices paid component rose to the highest level since Aug. 2011. Readings over 50% indicate expansion.

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