Retail assets remain the top pick among real estate investors, and yet another opportunity has hit the market, drawing a strong response from investors.
CBRE Ltd. listed Comox Centre Mall in downtown Comox on Oct. 7, drawing responses from private, institutional, national and international parties within the first day.
“It’s been really well received,” said Ross Marshall, who together with Chris Rust of CBRE’s Investment Properties Group in Victoria is handling the listing. “We’ve got buyers from all over the country who’ve inquired, as well as some offshore. … I’m assuming, based on the initial interest, that we’ll probably be in a situation where we have multiple bids.”
Originally built in 1966, the mall offers 101,752 square feet on eight acres in downtown Comox, steps from the waterfront with its marina and sea plane terminal and adjacent to the new Port Augusta transit exchange.
“You can’t find eight acres downtown, or well-located, anywhere,” Marshall said. “This serves a really good demographic and core population.”
And additional population could be cultivated on site, with a development permit in place for a six-storey mixed-use development with 52 residential units and three commercial units at grade.
Development at CFB Comox also promises to support population growth, with the federal government allocating $96 million for projects over the next three years as part of its renewal of the defence sector.
BC Assessment values Comox Centre at more than $20.5 million, versus a replacement value in excess of $600 per square foot (or more than $60 million).
“Your replacement value is more than twice what the current price guidance is,” Marshall said. “On a price per [square] foot basis we’re under $400.”
Recent transactions show that investors are willing to pay for properties like Comox Centre, which is anchored by Your Independent Grocer, a BC Liquor Store, and tenants including CIBC and Dollarama.
“Needs-based retail is at the top of most institutional and private buyers’ lists right now because it’s proven its resilience when it comes to market turbulence,” Marshall said. “This product type is very resilient, and regardless of where the five-year bond is today, we still have appetite because these are essentially irreplaceable.”
According to Altus Group, retail was the sole asset type within the Metro Vancouver area to see volume growth in the first half of this year. (Altus Group tracks deals worth over $1 million.)
“Transaction volume rose a marginal 1 per cent to $866 million, supported by investor demand for necessity-based grocery-anchored strip centres, prime street-front locations and assets with low vacancy and inflation-hedging characteristics,” it said.
Within B.C. as a whole, Avison Young (Canada) Inc. reported a decline in the aggregate value of deals over $5 million, but a larger number of deals as investor appetite remain strong.
“Grocery- and necessity-anchored properties … continue to appeal to private investors, institutions and REITs. The principal constraint is not a lack of demand but limited availability,” Avison Young reported. “With relatively few grocery-anchored centres trading, some investors are broadening their acquisition criteria rather than continuing to compete for scarce core product.”
This has supported activity in secondary and tertiary markets, with Aberdeen Village Centre in Kamloops, a grocery-anchored property similar in size to Comox Centre, sold for $31.65 million in September. City Gate Centre in Chilliwack, a grocery-anchored mall with 45,764 square feet, changed hands the same month for an undisclosed sum.
While Avison Young said total year-end volumes will depend on the kind of assets brought to market, Marshall said forward momentum appears to be strong, with investors moving beyond “a price discovery situation to a capital deployment [situation].”
“Regardless of where the five-year bond [rate] is today, we still have appetite because these are essentially irreplaceable,” Marshall said of grocery-anchored retail assets. “Those who are looking look beyond the current and existing challenges and look long term.”
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