Multinational retail interests have come full circle on a long-disused large industrial building on Vancouver’s Southeast Marine Drive.
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 base of Main Street, which was once sought for a massive Walmart retail location.
The property was sold by local developer Hungerford Properties, who had previously notified Daily Hive Urbanized that the City of Vancouver was considering its application for its own mixed-use development in September 2021.
Data retrieved shows that Hungerford Properties sold the lot to Amazon on December 17, 2021, and the deal was worth $150 million, according to commercial real estate company Avison Young.
Hungerford Properties said it cannot comment on the sale due to confidentiality reasons, and Amazon notes it has no specific development plans to share at this early stage of planning.
The latest estimated value of the property by BC Assessment is approximately $109 million.
Possible uses of Amazon
Given the zoning, the property could potentially be used for Amazon’s logistics-related activities, such as warehouse development for a fulfillment center, sorting center or delivery station.
Amazon is known for renting out the space it needs around the world for its massive operations, but in recent years, buoyed by the company’s massive growth from pandemic-driven demand, it has moved towards buying more properties, with especially industrial locations for warehouses.
An analysis by commercial real estate firm Cushman & Wakefield indicates that Amazon’s ownership of its industrial properties in North America grew 75% year on year from 20 million square feet in 2020 to 35 million square feet in 2021.
The company leased 370 million square feet of industrial space in North America last year, representing a 29% year-over-year increase from the 286 million square feet it owned in 2020. m² — an increase of 27% compared to 454 million m² in 2020.
Industry reports show that Amazon and other logistics-oriented companies are increasingly buying their own warehouses, especially where industrial space markets are particularly tight.
Metro Vancouver is the epitome of this growing shift to owning industrial space. Vacancy to rent commercial space was just 0.5% in the second quarter of 2022, the lowest of any major metropolitan region in North America. According to Avison Young, industrial vacancy rates in the region have fluctuated at or below 1% for the past six quarters (since the end of 2020) and below 2% for the past six years.
Such low vacancy rates push up industrial rents. Some companies are turning to acquiring industrial space as a “potential hedge at rental rates that continue to escalate rapidly” in Metro Vancouver.
Real estate acquisitions also provide greater long-term security and the ability to avoid disruptions to operations, which is especially important for logistics companies. Such a strategy allows Amazon to focus on growth, rather than making up for lost capacity when leases reach the end of their lives that cannot be renewed. The company has opened about a dozen logistics warehouse spaces in the region over the past decade.
For example, Amazon’s YVR3 fulfillment center at 109 Braid Street, next to SkyTrain Braid Station in New Westminster, opens in 2012, on leased property. Sometime in the medium term, the company will have to move out of this site as it seeks a mixed-use development by developer QuadReal Property Group.
Significant new additional commercial space totaling millions of square feet of floor space is in the pipeline for the short to medium term, but the vast majority of these new spaces in the region have already been pre-let.
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 three-acre secondary site further east – the Kia dealership location at 396 Southeast Marine Drive, adjacent to Marine Gateway and SkyTrain Marine Drive Station.
Although 86-168 Southeast Marine Drive is no longer owned by the developer, they have gone ahead with their internal proposal to redevelop 396 Southeast Marine Drive into two towers of up to 19 floors, containing approximately 400,000 square feet of office space and more than 200,000 square feet of light industrial space. 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 low-rise buildings built in the 1950s that were previously used for a Dueck car dealership. The value of the deal with Walmart is unknown.
In September 2001, Walmart filed a rezoning application with the City of Vancouver to redevelop 86-168 Southeast Marine Drive into its first retail store in the city.
Walmart’s proposal called for a new purpose-built building with a 143,000 square foot retail space, plus two commercial retail units totaling 27,000 square feet of space, and two restaurant units totaling 13,000 square feet and featuring Marine Drive street fronts. This use would be supported by 717 vehicle parking facilities.
But the proposal for the store turned into a protracted battle with the municipal government, with the city council rejecting the proposal four years later because of the perceived negative economic and environmental impacts the multinational low-cost retailer would have on local businesses and the wider community.
The proposal was considered at the end of Walmart’s period of rapid expansion in the United States, Canada and several other major international markets between the early 1990s and early 2000s. There was growing criticism at the time of the sudden impact of Walmart on local businesses, especially within smaller communities, as well as on environmental problems, traffic congestion and low wages.
For this reason, the city ordered Walmart to conduct a retail impact study in 2002 and determined that the store would not negatively impact other retail areas, with the exception of Fraser Street. The investigation found that Walmart would primarily compete with other major retail chains, such as the neighboring Superstore to the east.
To address the environmental concerns, Walmart’s store design featured a high degree of green building features that were new to the company’s store design standards at the time.
Walmart suggested including a large green roof, geothermal systems and even a wind turbine. There would also be ample skylights on the roof to let in natural light, natural air ventilation systems, extensive plantings and new trees, a biofiltration pond, and semi-permeable materials for stormwater in the surface parking lot. This was all part of the strategy to pursue a minimum LEED Gold standard for green building, creating the world’s greenest major retail chain.
In addition, Walmart pledged to consider operating a shuttle bus service for customers to the nearby future Marine Drive Station on SkyTrain Canada Line, focus on sustainable products and practices, and partner with local non-profit organizations to develop an urban farming program on the spot.
But the then city council was unimpressed with Walmart’s proposal, and in June 2005 the application was rejected by 8-3 votes by the majority of the COPE party. Some of the city council’s criticism of the proposal focused on the multinational chain’s operations and labor practices, not the details of the planning application.
That same month, the city council also rejected an application from Canadian Tire to build a new store just west at 26 Southwest Marine Drive. But in 2007, a new city council with a different composition of members approved a more ambitious shopping complex application for the site, resulting in the 2010-built 240,000-square-foot retail building housing Canadian Tire, Sport Chek, Marshalls and Mark’s Clothing Store. .
Walmart opened its first retail store within Vancouver’s municipal limits in 2009 after renovating a 1955-built 122,000-square-foot warehouse building on Grandview Highway 3585, formerly occupied by Costco.
In 2016, Walmart Supercentre opened its doors in a new purpose-designed building in North Richmond, across the river, south of Walmart’s rejected Vancouver Marine Drive retail location.