City Square Mall, at the northwest corner of the intersection Cambie Street and West 12th Avenue, immediately west of Vancouver City Hall, recently changed hands under a significant deal.
The mixed-use commercial complex, designed with a European village flair, is comprised of both heritage and contemporary structures, with approximately 250,000 sq. ft. of leasable floor area, including about 50 retail spaces and two six-storey office buildings. Underground levels contain 650 vehicle parking spaces.
The lot size, spanning much of the city block, is 145,484 sq. ft. (3.3 acres).
A CBRE retail market report for the second half of 2018 indicates the shopping centre, located at 555 West 12th Avenue, was sold to Richmond-based Sun Commercial Real Estate Group for $225 million — well over its latest assessed value of $102.7 million – with the identified value of the land and structures almost evenly split.
It was one of the most expensive property acquisitions in Vancouver last year.
Sun Commercial’s portfolio includes the Sands Hotel on Davie Street, Westwood Plateau Golf & Contry Club in Coquitlam, Mylorda Sidaway Golf Club in Richmond, and Lucky 9 Lanes Bowling Centre at Richmond’s Riverport Entertainment Complex. They did not respond to a request for comment on their acquisition.
According to Conor Finucane, a Senior Advisor for Commercial Sales & Leasing with NAI Commercial, the purchase price is indicative of the property’s redevelopment potential.
City Square is located just one block away from the future transit interchange between the Millennium Line and Canada Line at Broadway-City Hall Station, and the City of Vancouver is currently engaged in a planning process for the Broadway Corridor that will allow for new residential and employment density, particularly on sites near the new subway stations.
“The purchase price is likely reflective of speculation over future redevelopment potential, rather than the existing building and income,” Finucane told Daily Hive.
He says existing zoning for City Square permits a maximum floor space ratio (FSR) density of twice the lot size, and nearby sites have zoning that allow a maximum density of three times the size of the lot.
The recently completed eight-storey, mixed-use The Spot at Cambie development – located just across the street – was accomplished by a rezoning allowing a density of 3.99 times the size of its lot.
If a 3.99 FSR standard, for example, is used and applied to City Square, the price per buildable foot of land would be about $388 per sq. ft. Contrast this with recent land sales along the Cambie Corridor, where prices have reached over $500 per buildable sq. ft.
“There is also a recent trend of incorporating shopping centres into a redevelopment, such as the redevelopment of the Oakridge Centre, Brentwood Mall, and the upcoming Lansdowne Centre redevelopment, so that is another possibility,” said Finucane.
The scheduled 2025 opening of the SkyTrain extension, which will move the Millennium Line’s western terminus to Arbutus Street, is expected to be a major catalyst for redevelopment along the route.
For the immediate area around the intersection of West Broadway and Cambie Street, a 22,237-sq-ft under-utilized lot currently occupied by a Wendy’s restaurant was recently on the market, and there is already development activity at this prominent intersection’s southwest corner, where construction is well underway on a new seven-storey retail and office building.
Moreover, the City of Vancouver has plans to redevelop the entire city block it owns immediately south of City Hall — the same city block with the Canada Line station entrance and ground-level parking lot.
A new significant City Hall campus expansion is envisioned for this expansive site, including new city council chambers, city service public counters, public spaces, offices, and a significantly improved public realm. This has been described by city staff as a “mixed-use project that will successfully integrate the Broadway and Cambie transit stations and enhance people movement in this busy intersection.”
Such redevelopments resulting in a new concentration of commercial space and an improved public realm for the area could also provide City Square with a much-needed boost in activity.
Despite its close proximity to Broadway-City Hall Station, the shopping centre’s patronage is generally limited largely to Vancouver General Hospital (VGH) precinct workers, City of Vancouver staff, other office workers, and residents in the immediate area.
Its businesses are largely local-serving retail and services, including Dollarama, Kin’s Farm Market, Steve Nash Fitness World, Kirin Restaurant, and a food court with some chain outlets.
City Square also currently suffers from a high vacancy, including a vacant anchor retail tenant space that was, up until July 2018, occupied by Safeway.
Office spaces within the complex include East Side Games Studio and tenants associated with the VGH precinct, such as BC Transplant’s Vancouver office.
But the shopping centre is arguably under-appreciated architecturally.
City Square opened in 1989 after a redevelopment that incorporated and restored the Model School and Normal School — four-storey granite and sandstone heritage buildings that were completed in 1905 and 1908, respectively. They were designed with an Italianate style, with stained glass windows, copper cupola, and slate roofs.
The contemporary redevelopment — designed by renowned architect Paul Merrick of Merrick Architecture — added two office towers on the property, and the indoor courtyard-like mall was formed by constructing a large light-flooding glass atrium that spanned the spaces between the old and then-new buildings.
City Square was previously recognized with the Award for Excellence in Innovative Design and Construction of a New Center by the New York City-based International Council of Shopping Centers.
Further building upgrades also gained the property Heritage Certification recognition certificates in 2006 and 2013, awarded by the City of Vancouver’s Heritage Commission.
The municipal government’s Heritage Registrar lists the Model School and Normal School as A-class significant heritage buildings with protected legal designation.