Commercial Real Estate Transactions in Vancouver Experience Steep Decline in 2023

The total dollar volume for commercial real estate transactions in the Metro Vancouver area plunged 48 per cent in 2023 compared with 2022, research by Colliers shows.

The real estate firm reports $6.75 billion worth of transactions in 2023, compared with $12.95 billion in 2022. All categories of real estate experienced an annual decline, its research shows.

The total number of sales fell in lockstep, down 47 per cent to 1,347 last year from 2,352 in 2022.

Kirk Kuester, Colliers’ executive managing director in Vancouver, told RENX the region’s market experienced “one of the more challenging cycles, if not the most challenging cycle” in years.

“I would say that relates largely due to the liquidity issue that most everyone has faced and continues to face as a result of just the overall tightening in the capital markets,” he said. “On a relative basis, my sense would be that our transaction velocity is probably lighter, softer, has probably been more affected than other markets.

I might attribute that to the fact that our valuations really kind of ramped up over the last couple of years and the delta between the bid and the ask on most everything is probably more challenging in this market than in any other market . . . We probably are a bit more challenged in actually getting deals closed.”

Kuester said there’s not the level of distress today that people might think or expect.

“What we’re seeing today is a lot more structuring being negotiated into transactions in a way to try and hit an ask, but through terms and through time get the buyers where they need to be from a return perspective because everybody’s returns today kind of reflect capital markets, current interest rates,” he said.

“And they’ve had a really, really serious effect on the marketplace and on pricing.”

In contrast, in 2021 there was just under $14 billion in transactions in the market. The Vancouver market had rebounded in 2021 and 2022 following COVID.

In 2020, the market was about $7 billion while in 2019, prior to the pandemic, governments imposed a number of taxes and regulations which served to slow the market. Transactions were just under $7 billion that year as well.

The previous high of over $14 billion occurred in 2017.

According to Colliers, the top-10 deals in 2022 totalled $1.2 billion, while in 2023 it was $824 million.

Here are the top transactions during 2023:

1. 2325 190th St., Surrey – $178 million – Industrial, Coastal Heights distribution centre, sold by [Company A] and [Company B] to [Buyer].

2. 1145 Inlet St., Coq…