The "new normal"

A rocky recovery on tap for commercial real estate

BY PAUL LEONARD of the VBJ

In almost every sector - retail, office and manufacturing - the commercial real estate sector remains a challenging place to do business.

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That doesn't mean there aren't plenty of commercial transactions being made throughout the region, including last month's $8.3 million sale of Quad 205, a flurry of lease deals at nearby EastRidge Business Park, and more recently, notice of an impending relocation of MetLife Bank's Vancouver offices to the Al Angelo Building downtown.

However, decreased demand for office and retail space, as well as tough new financing terms from lenders, continue to drastically alter the commercial real estate landscape, according to Roger Qualman, an executive vice president and partner at NAI Norris, Beggs and Simpson in Vancouver.

"This well could be the ‘new normal,'" Qualman said. "Banks are reluctant to finance a project unless its perfect in every way."

Bob Bernhardt, associate broker and owner of Jenkins-Bernhardt Coldwell Banker Commercial in Vancouver, agrees.

"Lenders definitely want to see much more skin in the game," he said.

Despite the tough going in terms of financing, Bernhardt said he expects improvement next spring in the retail leasing market as more national chains return to the deal-making table. However, the office side of the business may take more time to recover, he said.

For now, the recently-completed Angelo building stands out in an otherwise dismal commercial leasing market, with MetLife joining Columbia Bank and the relocated headquarters of the Al Angelo Company at the $17 million five-story, 60,000-sq.-ft. building.

"The businesses that do come out of this will be the better for it," Bernhardt said. "Right now all we can do is hang on."

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