Vancouver prepares for post-Olympic influences

Vancouver's commercial real estate market continues to face a shortage of available product as the 2010 Winter Olympics approach.
The shortage, especially in the coveted office class, is posing challenges for buyers and sellers as they attempt to narrow their price-expectation gap while the market normalizes following last year's period of excessive demand. However, investor confidence shows continuing improvement amidst slightly increasing vacancy.
Capitalization rates, traditionally the lowest in the country, are not expected to influence office investment greatly, although they may propmpt some industrial and retail investors to spend their increasingly-available cash in other Canadian markets. But Vancouver's strong appeal to international investors, whose love for the West Coast market often defies global crises and downturns, should help offset declines -- and bolster the average sale price, which rose to $29.2 million in the first half of 2009 from $24.5 million in the second half of 2008.
Meanwhile, the post-Olympic period is expected to shine more light on long-term investment prospects as a large number of leases and mortgages roll over. Many office tenants negotiated leases that were designed to expire after the Games so that rental rates would not spike, and mortgages are slated to mature as investors continue to deal with the effects of the U.S. sub-prime mortgage crisis.

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