The Vancouver Business Thread

[Changing City]

Originally Posted by jollyburger

Westbank just dumped M2 as well. With Creative Energy development at risk I wonder if any of their other projects are at risk of stalling. Oakridge Park is safe with Quadreal running the show. Senakw the same with all the government loans. Maybe Joyce II?

Westbank are clearly in the process of restructuring their entire operation, including selling off completed assets. M2 was apparently sold in July.

It appears that Icon West, the construction company that has built many of Westbank's buildings won't have anything being built once the Butterfly is complete, which must be quite soon. Westbank Living, the rental arm has far fewer buildings that they still manage, with some of the rental buildings having been sold. I think Joyce 2 and Alma are the only residential rental projects currently under construction here, and both are topped out. Presumably both are financed with commercial mortgages, so unless there are significant cost over runs, there wouldn't seem to be any reason why they wouldn't get completed, and the recent company decisions would indicate they might then be sold.

There are a number of projects that might give an indication of how Westbank will develop in the future. They've clearly found an ownership partner for the three East Hastings rental towers that they just submitted, so that's a change of approach, although they've often shared ownership with companies like Peterson, Crombie and Allied, so it's not like they've only developed on their own. The M5 rental tower on Main will probably be a good indication of whether they're still going to develop, or whether they add an ownership partner there (or just stall for now). M4, the sister office to M2 is nearly complete, and that could be sold if they need more capital.

They seem to own a lot of property in San Jose, with a number of schemes that haven't started yet. I suspect that the US developments, including Seattle, might be part of the story behind the financial crunch that they've obviously been trying to get out of in the past couple of years.

[jollyburger]

Originally Posted by Changing City

Westbank are clearly in the process of restructuring their entire operation, including selling off completed assets. M2 was apparently sold in July.

It appears that Icon West, the construction company that has built many of Westbank's buildings won't have anything being built once the Butterfly is complete, which must be quite soon. Westbank Living, the rental arm has far fewer buildings that they still manage, with some of the rental buildings having been sold. I think Joyce 2 and Alma are the only residential rental projects currently under construction here, and both are topped out. Presumably both are financed with commercial mortgages, so unless there are significant cost over runs, there wouldn't seem to be any reason why they wouldn't get completed, and the recent company decisions would indicate they might then be sold.

There are a number of projects that might give an indication of how Westbank will develop in the future. They've clearly found an ownership partner for the three East Hastings rental towers that they just submitted, so that's a change of approach, although they've often shared ownership with companies like Peterson, Crombie and Allied, so it's not like they've only developed on their own. The M5 rental tower on Main will probably be a good indication of whether they're still going to develop, or whether they add an ownership partner there (or just stall for now). M4, the sister office to M2 is nearly complete, and that could be sold if they need more capital.

They seem to own a lot of property in San Jose, with a number of schemes that haven't started yet. I suspect that the US developments, including Seattle, might be part of the story behind the financial crunch that they've obviously been trying to get out of in the past couple of years.

I wonder how involved Icon West was involved with construction versus just doing management. I think Carion and Peak Construction handled a lot of the actual work?

M5 encroached into view cone 3.2.4.a which got eliminated so maybe they'll increase the height a bit. MCEG zoning limited them to 25 storeys.

"The incentives proposed by staff, including additional height anddensity of two floors, cannot be appliedto M5 due to the viewcone restrictions as we are already maximized on height."

https://council.vancouver.ca/20240123/documents/phea4oppose20240123-redacted.pdf

I guess if he touches Fairmont Pacific Rim or Shangri-la you know it's getting real.

[whatnext]

Originally Posted by jollyburger

I wonder how involved Icon West was involved with construction versus just doing management. I think Carion and Peak Construction handled a lot of the actual work?

M5 encroached into view cone 3.2.4.a which got eliminated so maybe they'll increase the height a bit. MCEG zoning limited them to 25 storeys.

"The incentives proposed by staff, including additional height anddensity of two floors, cannot be appliedto M5 due to the viewcone restrictions as we are already maximized on height."

https://council.vancouver.ca/20240123/documents/phea4oppose20240123-redacted.pdf

I guess if he touches Fairmont Pacific Rim or Shangri-la you know it's getting real.

One has to question the wisdom of selling off rental assets that generate predictable and stable income. I guess that’s a sign of how desperate they might be.

It will be very interesting to see how many units in the Butterfly come up for sale once it’s completed.

[jollyburger]

Inside The Cost-Profit Analysis Of Three-Bedroom Units In Metro Vancouver

These days, factoring in all the various costs and assuming a relatively normal price for the land, the cost to build is around $900 per square foot, says Hani Lammam, Executive Vice President at Cressey Development Group, which is a flat number that doesn't change across unit sizes.

Based on average unit sizes of 425 sq. ft for studio units, 545 sq. ft for one-bedroom units, 850 sq. ft for two-bedroom units, and 980 sq. ft for three-bedroom units, the total cost translates to around $382,500 per studio unit, $490,500 per one-bedroom unit, $765,000 per two-bedroom unit, and $882,000 per three-bedroom unit.

On the other side of the ledger is the income. For a rental building in an average location, asking rents of $2,200 a month for studio units, $2,600 for one-bedroom units, $3,600 for two-bedroom units, and $4,000 for three-bedroom units are realistically achievable (without factoring in affordability requirements). After deducting operation expenses, including property taxes, these units are held with an annual net operating income of around $19,386 per studio unit, $23,904 per one-bedroom unit, $35,200 per two-bedroom unit, and $39,718 per three-bedroom unit.

"The real problem, though, is not that we don't make money off of the three-bedroom units, it's that we have to drive the revenue [higher] on the one-bedroom units in order to subsidize the three-bedroom units," Lammam explains. "It's not good enough not to make money on it. In order for me to be able to finance the project, I have to average out a return across all of it, so what really happens is the one-beds are subsidizing the three-beds. That's really what happens."

For strata units, the numbers are not much different, Lammam says, but the process is a bit different as developers have to pre-sell a certain amount of units before they can commence construction. It's commonly known that lenders generally require developers to sell somewhere between 60% and 70% of units in a project before they provide construction financing. However, what's less known is that they are often required to do so with a profit margin of about 15%, various developers have confirmed to STOREYS.

https://storeys.com/apartment-unit-sizes-costs-profits-vancouver/

[AlessioSBT]

Nespresso is closing the store at Hudson Bay and move it to Pacific Centre.

Is it my impression or it seems like Hudson Bay just gave up and it's kinda slowing dying?

[jollyburger]

Originally Posted by AlessioSBT

Nespresso is closing the store at Hudson Bay and move it to Pacific Centre.

Is it my impression or it seems like Hudson Bay just gave up and it's kinda slowing dying?

I assume Nespresso doesn't want to be stuck with giving The Bay stock and not getting paid.

[whatnext]

Originally Posted by jollyburger

I assume Nespresso doesn't want to be stuck with giving The Bay stock and not getting paid.

I had the impression owned the stock and was a concession within the Bay? I notice they've closed all the public access doors on that side (Seymour) that couldn't have helped.

[jollyburger]

Originally Posted by whatnext

I had the impression owned the stock and was a concession within the Bay? I notice they've closed all the public access doors on that side (Seymour) that couldn't have helped.

I'm not sure.. Is that the last HBC boutique they had in Canada?

[LeftCoaster]

Originally Posted by AlessioSBT

Nespresso is closing the store at Hudson Bay and move it to Pacific Centre.

Is it my impression or it seems like Hudson Bay just gave up and it's kinda slowing dying?

Slowly?

Total freefall.

[whatnext]

Originally Posted by LeftCoaster

Slowly?

Total freefall.

Didn’t they just buy Neiman Marcus?

[LeftCoaster]

Not really, no.

Amazon and Salesforce bought Neiman Marcus. HBC continues to have no capital.

[jollyburger]

Originally Posted by whatnext

Didn’t they just buy Neiman Marcus?

Upon closing of the transaction, HBC’s Canadian business will be recapitalized as a standalone entity, separate from Saks Global, with significantly reduced leverage and enhanced liquidity. HBC will continue to wholly own its Canadian retail and real estate assets, including Hudson’s Bay, which operates TheBay.com and the Hudson’s Bay network of stores, as well as a CAD$2 billion real estate portfolio. As a result, HBC’s Canadian business will be well positioned to support future growth, while continuing to serve its loyal Canadian customer base.

https://www.neimanmarcusgroup.com/HBC,-P...Technology-Powered-Luxury-Retail-Company

[hollywoodnorth]

looks like the Red Bull Ingredient Facility is U/C out in Chilliwack now with photos at this link >> https://buildchilliwack.com/project/8190-brannick-place-red-bull-ingredient-facility-chilliwack/

[jollyburger]

Looks like it got approved it in May and I think those photos are from June

https://fraservalleytoday.ca/2024/05/07/chilliwack-council-to-vote-on-red-bull-development-tuesday/

Concrete for the floor is already finished I assume from these photos (some more below the photo)



https://www.facebook.com/story.php?story_fbid=1009548637639332&id=100057526145865&_rdr

Guys operating the concrete boom

https://www.instagram.com/p/DBiHOGGpmyS/?img_index=1

1400 cubic metre pour timelapse

https://www.instagram.com/terraform_ltd/reel/DBo_FAAAjpq/

[Changing City]

At the end of last week, the sudden closure of Bench, a business accounting firm was posted and discussed on the Telus Garden thread. The business is based in the office space underneath the condo tower, with an entrance on Robson Street. I've moved the story here, as it seems more appropriate.

Canadian Press are reporting that "A California-based HR tech company says it will acquire a Vancouver-based bookkeeping service that abruptly halted operations last week.

Employer.com says in a statement it has been working with Bench customers behind the scenes to ensure a seamless transition.

The company says customers will continue working with the same in-house bookkeepers and that all of its data is intact, secure and protected."

I hadn't appreciated that Bench moved to Vancouver and changed its name in 2013, having started out in 2012 as 10sheet Inc. in the U.S. Presumably the new announcement will mean that the Vancouver offices continue in operation, at least for the time being. The staff who worked for Bench have apparently already been offered their jobs back.. The new owner is a new umbrella business set up by a San Francisco entrepreneur who also operated Recruiter.com.

[officedweller]

Thanks. Good to hear.

[jollyburger]

The most likely scenario will see existing customers dump the service and eventually seeing the new owners consolidate in SF.

[jollyburger]

Some general GEC news.

GEC Education Mega Center® completed its DP Amendment and submitted it to the City of Surrey for approval.

GEC® CyberCity is in discussions with a major hotel chain that is interested in establishing a presence in Richmond, BC.

https://www.accesswire.com/951413/gecc-provides-year-end-review

[officedweller]

Originally Posted by jollyburger

Some general GEC news.

https://www.accesswire.com/951413/gecc-provides-year-end-review

Nice summary:

Summary of GEC® Living's development milestones in 2024:

• GEC® Granville Hotel was sold for $70M in November 2023 to increase liquidity and reduce financing costs.
  
• GEC® Langara purchased land in December 2023, approved for a 10-storey development. As a result of the provincial government's Bill 42 Transit Oriented Area development policy, application has been made for approval to an increase in the size of the building to 26 storeys.
  
• GEC® King Edward, which commenced operation in June 2023, has achieved near-zero vacancy.
  
• Stabilized and increased rental incomes were achieved at GEC® Burnaby, GEC® King Edward, GEC® Pearson, and GEC® Marine Gateway.
  
• GEC® Viva, which was under renovation for 9 months in 2024, is now fully operational with limited vacancies.
  
• GEC® Kingsway commenced operation in September 2024, with an additional 284 beds added to our portfolio.
  
• Eight buildings are fully operational, operating nearly 1,300 beds in Metro Vancouver.
  
• GEC® Oakridge received its demolition permit in December 2024 and will start demolition in January 2025.
  
• GEC Education Mega Center® completed its DP Amendment and submitted it to the City of Surrey for approval.
  
• GEC® CyberCity is in discussions with a major hotel chain that is interested in establishing a presence in Richmond, BC.
  
• Investment and cooperation agreements relating to GEC® Oakridge were executed with Pomerleau Capital of Montreal, Quebec.

Corporate Finance Activities in late 2023 and during 2024:

• GEC® King Edward completed a CMHC take-out mortgage at reduced interest rates.
  
• GEC® Oakridge received CMHC approval for $121 million for construction and take-out financing.
  
• GEC® Burnaby and GEC® Pearson submitted mortgage refinancing applications to CMHC in October 2024.

In summary, GECC subsidiaries completed over $148 million of mortgages and refinancing across the portfolio, with $214 million pending approval in late 2024 or early 2025.

Looking ahead into 2025, GECC plans to undertake the following activities:

• Continue to streamline the educational divisions through cost reductions, re-focus on its market segments and add new programs.
  
• Commence construction at GEC® Oakridge.
  
• Increase the capital base of GEC Education Mega Center®, seek CMHC financing, and commence construction.
  
• Refinance GEC® Burnaby and GEC® Pearson.
  
• Complete the development application at GEC® Langara to increase density and capacity.
  
• Stabilize the occupancy rate for GEC® Kingsway, which commenced operations in September 2024.
  
• Add new properties through the GEC® MLPP initiative (Master Lease Partnership Program).

https://www.accesswire.com/951413/gecc-provides-year-end-review

That former GEC Granville property (formerly a Best Western) is now the Grand Park Hotel & Suites.
Nice to see it come back as a hotel.

https://www.grandparkdowntownvancouver.com/

[jollyburger]

FYI Pomerleau owns ITC Construction