Vancouver School Board looking to sell Kingsgate Mall for redevelopment

Exterior of Kingsgate Mall in Vancouver. (Beedie)

Over the past decade, the Vancouver School Board (VSB) and its elected officials have, on occasion, pondered the sale and redevelopment of its under-utilized Kingsgate Mall property, but nothing ever came out of those previous discussions.

This time, however, it could be different.

As first reported in the Globe and Mail, VSB’s representatives told a Supreme Court judge last month that the school board has begun the process of considering a potential sale or redevelopment of the shopping centre and the process of submitting a rezoning application to the municipal government. VSB began this process on May 17, 2023, according to a judge’s oral summary last month.

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This depends on the termination of VSB’s long-term lease of the property to local developer Beedie, which is something the school board has been pushing since late spring.

The school board and developer have been at odds over the amount of back rent that is owed since November 2017, when Beedie’s third lease renewal term began.

In April 2023, Daily Hive Urbanized first reported on the court’s decision to side with Beedie’s request to open the process of having the court reconsider the $42 million owed to the school board as of the January 2022 arbitration decision.

On May 17, 2023, the VSB issued a notice of default to Beedie, ordering the developer to pay back rent totalling $49.9 million within 60 days, no later than July 16, at which point the landlord will re-enter and re-possess the property if the rent is not paid. But the judge’s July 13 decision deemed that the termination of the lease cannot occur in the midst of the current appeal proceedings over the amount of back rent owed. The judge ruled the decision will be deferred until there is a decision on the appeal.

The oral summary also reveals Beedie has posted its 2019-built Surrey warehouse property at 18890 22nd Avenue in Campbell Heights as collateral for the consideration of the appeal, which was originally proposed by the developer as a condition of the court’s previous April 2023 decision. This 30-acre property is leased to Sobeys for its regional distribution centre.

The proceedings also revealed that Beedie owns nearly $1 billion in assets and carries debt of over $400 million, as of late 2021.

Daily Hive

Exterior of Kingsgate Mall in Vancouver. (Beedie)

Beedie’s rent for Kingsgate Mall is determined by a formula, which takes into account the property’s market value.

The January 2022 arbitration decision declared the market value of the mall to be $116.5 million, which is exponentially higher than the property’s market value during the previous lease term.

According to BC Assessment’s latest roll, as of July 2022, Kingsgate Mall is worth $247.3 million, including $246.96 million for the land and $267,000 for the structure. This is up from $171.5 million in July 2021, representing a 44% year-over-year increase following Vancouver City Council’s June 2022 approval of the Broadway Plan.

BC Assessment pegged the property’s value at $118.5 million in July 2017 and $45.6 million in July 2013.

Beedie has a 99-year lease over Kingsgate Mall, which first began in 1972 under a different entity called Royal Oak Holdings. The first 25-year term with Royal Oak Holdings ended in 1997, at which point the lease provided seven 10-year renewal options and a final four-year option. So far, the first three 10-year renewal options have been exercised.

Beedie took over the lease from Royal Oak Holdings in 2005.

Kingsgate Mall in Vancouver’s Mount Pleasant. (Google Maps)

Inside Kingsgate Mall in Vancouver. (Beedie)

Exterior of Kingsgate Mall in Vancouver. (Beedie)

Previous suggestions of redeveloping Kingsgate Mall entailed the possibility of selling the air rights to the property.

The 3.2-acre property spans an entire city block at the southeast corner of the intersection of East Broadway and Kingsway in Vancouver’s Mount Pleasant neighbourhood. The 1980-built indoor mall spans a floor area of over 138,000 sq ft, including 115,000 sq ft of gross leasable area. Its largest retailers are Buy Low Foods, Shoppers Drug Mart, and BC Liquor Store.

With SkyTrain’s future Mount Pleasant Station located just to the west at the intersection of Main Street and Broadway, Kingsgate Mall is considered a prime transit-oriented development site.

The Broadway Plan identifies Kingsgate Mall as one of the “Large and Unique Sites” in the area plan that require special attention due to their large-scale lot redevelopment potential. It prescribes towers up to between 25 and 30 storeys, with the tallest buildings located closer to Kingsway.

The existing amount of retail/service space found in the mall should be retained in a redevelopment that does not result in any net loss of such commercial spaces. As well, residential uses should include either secured market and below-market rental housing or social housing. Specific public benefits should include a plaza or small park, as well as possible arts/cultural spaces or childcare.

The sale and/or redevelopment of Kingsgate Mall would provide the cash-strapped VSB with much-needed revenue. The school board is also in the process of determining the future of several other properties elsewhere in the city, including potential revenue opportunities.

VSB told Daily Hive Urbanized it is unable to directly comment on the matters due to the ongoing legal proceedings, but any changes to the future use of the mall would have to be approved by the elected trustees and go through a rigorous land disposal review process.

In a provided statement upon inquiry, Rob Fiorvento, the managing partner of Beedie, also said his company is similarly unable to comment directly, but noted: “The VSB plays an important role in our community and we will continue to collaborate with them in exploring future opportunities for the site and the neighbourhood.”

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