Amazon buys former Walmart Marine Drive site in South Vancouver for $150 million

Jun 8 2022, 2:20 am

Multinational retail interests have come full circle at a long unused major industrial property on Southeast Marine Drive in Vancouver.

Amazon has confirmed to Daily Hive Urbanized that it has acquired 86-168 Southeast Marine Drive — a 12.5-acre property, just west of the foot of Main Street, that was once eyed for a massive Walmart store location.

The property was sold by local developer Hungerford Properties, which had previously indicated to Daily Hive Urbanized that as recently as September 2021, the City of Vancouver was considering its application to pursue a mixed-use development of its own.

Retrieved records show Hungerford Properties sold the lot to Amazon on December 17, 2021, and according to commercial real estate firm Avison Young, the deal was worth $150 million.

Hungerford Properties said it is unable to comment on the sale due to confidentiality reasons, and Amazon notes it does not have any specific development plans to share at this early stage of planning.

BC Assessment’s latest assessed value of the property is about $109 million.

Amazon’s potential uses

Given the zoning, the property could potentially be used for Amazon’s logistics-related operations, such as a warehouse development for a fulfillment centre, sorting centre, or delivery station.

Amazon is known for leasing its required space around the world for its vast operations, but in recent years, buoyed by the company’s immense growth from pandemic-driven demand, it has been turning to buying more properties, specifically industrial sites for warehouses.

An analysis by commercial real estate firm Cushman & Wakefield indicates Amazon’s ownership of its industrial properties in North America grew by 75% year-over-year from 20 million sq ft in 2020 to 35 million sq ft in 2021.

The company leased 370 million sq ft of industrial space in North America last year, representing a 29% year-over-year increase from the 286 million sq ft it held in 2020. Globally, as of the end of 2021, Amazon leased 570 million sq ft — up by 27% compared to 454 million sq ft in 2020.

86 southeast marine drive vancouver

The Amazon-acquired property of 86-168 Southeast Marine Drive, Vancouver, with the old buildings now demolished. (Google Maps)

86 southeast marine drive vancouver

The property of 86-168 Southeast Marine Drive, Vancouver, before the buildings were demolished in 2019. (Hungerford Properties)

Industry reports have noted that Amazon and other logistics-oriented businesses are increasingly turning to buying their own warehouses, especially where industrial space markets are particularly tight.

Metro Vancouver is the epitome of this growing shift into owning industrial space. The vacancy rate for leasing industrial space was just 0.5% as of the second quarter of 2022, which is the lowest of any major urban region in North America. According to Avison Young, the region’s industrial vacancy rate has been hovering at or below 1% vacancy for the last six consecutive quarters (since late 2020) and at below 2% over the past six years.

Such low vacancies have been propelling industrial lease rents upwards. Some businesses are turning to acquiring industrial space as a “potential hedge against lease rates that continue to escalate rapidly” in Metro Vancouver.

Property acquisitions also better enable long-term security, and the ability to avoid any disruptions in operations, which is particularly important for logistics businesses. Such a strategy allows Amazon to focus on growth, instead of making up for lost capacity when it reaches the end of leases that cannot be renewed. The company has opened about a dozen logistics warehouse spaces across the region over the past decade.

For instance, Amazon’s 2012-opened YVR3 fulfillment centre at 109 Braid Street, next to SkyTrain Braid Station in New Westminster, is on leased property. Sometime over the medium term, the company will have to leave this site as it is being eyed for a mixed-use development by developer QuadReal Property Group.

Significant new additional industrial space totalling millions of sq ft of floor area are in the short- to medium-term pipeline, but the vast majority of these new spaces in the region are already pre-leased.

86-168 Southeast Marine Drive Vancouver Amazon

The Amazon-acquired property of 86-168 Southeast Marine Drive, Vancouver, with the old buildings now demolished. (Google Maps)

The controversial proposal for Vancouver’s first Walmart store

In 2018, Hungerford Properties announced it had acquired 86-168 Southeast Marine Drive and a smaller secondary three-acre site further to the east — the Kia dealership site at 396 Southeast Marine Drive, which is next to Marine Gateway and SkyTrain Marine Drive Station.

While 86-168 Southeast Marine Drive is no longer owned by the developer, they have proceeded with their in-house proposal to redevelop 396 Southeast Marine Drive into two towers reach up to 19 storeys, containing about 400,000 sq ft of office space and over 200,000 sq ft of light industrial and retail space.

Hungerford Properties acquired 86-168 Southeast Marine Drive from Walmart, ending the low-cost retail giant’s 20-year ownership history with the property. Shortly after the acquisition, the developer demolished the 1950s-built, low-storey buildings that were previously used for a Dueck car dealership. The value of the deal with Walmart is not known.

In September 2001, Walmart submitted a rezoning application to the City of Vancouver to redevelop 86-168 Southeast Marine Drive into its first store within the city.

Walmart’s proposal called for a new purpose-built building with a 143,000 sq ft store, plus two commercial retail units totalling 27,000 sq ft of space, and two restaurant units totalling 13,000 sq ft and providing street frontage with Marine Drive. These uses would be supported by 717 vehicle parking stalls.

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. The wind turbine and skylights are clearly depicted. (Perkins & Will/Walmart Canada)

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. Surface vehicle parking lots are located on the north and east sides of the property, while standalone commercial retail and restaurant buildings are located along Marine Drive. Click on the image for an enlarged version. (Perkins & Will/Walmart Canada)

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. This is the store interior layout. Click on the image for an enlarged version. (Perkins & Will/Walmart Canada)

But the proposal for the store became a protracted battle with the municipal government, with city council rejecting the proposal four years later over the perceived negative economic and environmental impacts the multinational low-cost retail chain would have on local businesses and the wider community.

The proposal was considered during the tail end of Walmart’s period of rapid expansion across the United States, Canada, and several other major international markets between the early 1990s and early 2000s. There was mounting criticism at the time over Walmart’s sudden impact on local businesses, especially within smaller communities, as well as environmental concerns, vehicle traffic congestion, and low wages.

For this reason, the city mandated Walmart to conduct a retail impact study in 2002, and it was determined that the store would not negatively impact other shopping areas, with the exception of Fraser Street. The study found that Walmart would mainly compete with other big box stores, such as the neighbouring Superstore to the east.

To help address the environmental concerns, Walmart’s store design carried a high degree of green building features that were at the time novel for the company’s store design standards.

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. The wind turbine and skylights are clearly depicted. (Perkins & Will/Walmart Canada)

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. The wind turbine and skylights are clearly depicted. (Perkins & Will/Walmart Canada)

86-168 Southeast Marine Drive Vancouver Walmart

The 2005-rejected design of Walmart’s proposal to open a store at 86-168 Southeast Marine Drive, Vancouver. The green roof and skylights are clearly depicted. (Perkins & Will/Walmart Canada)

Walmart proposed incorporating a large green roof, geothermal systems, and even a wind turbine. There would also be ample skylights on the roof to allow natural light to pour in, natural air ventilation systems, extensive plantings and new trees, a bio-filtration pond, and semi-permeable materials for rainwater on the surface parking lot. This was all part of the strategy to pursue a minimum LEED Gold green building standard, establishing the world’s greenest big box store.

Additionally, Walmart promised to consider operating a shuttle bus service for customers to the nearby future Marine Drive Station on SkyTrain Canada Line, target sustainable products and practices, and engage in partnerships with local non-profit organizations to develop on-site urban agriculture program.

But the city council of the day was unmoved by Walmart’s proposal, and in June 2005 the application was rejected in an 8-3 vote by the COPE party majority. Some of city council’s criticism against the proposal focused on the multinational chain’s operations and labour practices, not the details of the building application.

That same month, city council also rejected an application from Canadian Tire to build a new store just to the west at 26 Southwest Marine Drive. But in 2007, a new city council with a different makeup of members approved a more ambitious retail complex application for the site, which resulted in the 2010-built, 240,000 sq ft retail building containing Canadian Tire, Sport Chek, Best Buy, Marshalls, and Mark’s Clothing Store.

Walmart went on to open its first store within Vancouver’s municipal boundaries in 2009, after renovating a 1955-built, 122,000 sq ft warehouse store building at 3585 Grandview Highway, previously occupied by Costco.

In 2016, Walmart Supercentre opened in a new purpose-designed building in North Richmond, just across the river, south of Walmart’s rejected Vancouver Marine Drive store location.

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