RioCan REIT has sold the Strawberry Hill Shopping Centre in Surrey, marking one of the largest commercial property trades over the past year in the Metro Vancouver region.
The 35-acre centre near 72nd Avenue and 120th Street includes retailers such as The Home Depot, Winners, HomeSense, Sport Chek and PetSmart. It’s also home to a Cineplex cinema and includes a large amount of surface parking area.
Strawberry Hill has 35 retail units comprising 340,000 square feet of commercial space, said Yashar Khalighi, vice-president with CBRE in Vancouver, who represented the buyer in the deal.
Khalighi told RENX on Tuesday the deal was a share sale valued at $155 million. He identified the buyer as Strawberry Hills Shopping Centre Holding Inc.
The deal was also completed in part with The Firm Real Estate Services.
Deal one of Vancouver’s largest in past year
Over the last year there haven’t been many deals of this magnitude taking place in the Metro Vancouver market due to elevated interest rates and economic turbulence, Khalighi said.
When compared to the top CRE transactions of 2023, this deal would represent the second-largest deal of any asset class and the largest retail deal since the beginning of last year, according to a review of the largest trades in 2023 by Colliers.
The property enjoys significant holding income from its roster of national and international tenants, and there is potential for long-term phased development in line with Surrey’s overall densification path, Khalighi said.
Among the country’s fastest-growing cities, Surrey now has a population of 568,322, according to the latest census, and that growth is expected to continue with a forecasted population of 884,000 by 2051. Surrey could soon surpass Vancouver as B.C.’s most populous city.
This deal is an indication of investors’ confidence in the market, Khalighi said. It also shows that investment values will remain high due to a regional scarcity of land regardless of other economic variables.
“When you get an asset with significant holding income and future development potential in a central metropolitan area, this potential can outweigh the cost of borrowing, even at today’s rate.”
Site offers future redevelopment potential
Khalighi said it will remain business as usual at the shopping centre, which is nearly fully leased.
However, the size of the property would provide future redevelopment potential, he said, noting there is a residential development permit application for a residential rental project at the site already approved by the city.
RioCan, the seller, held just over 190 properties as of Sept. 30, 2023, according to its website.
The Toronto-based REIT says that nearly 95% of its value is located in six major markets and more than 56% in Toronto alone. It has 33.6 million square feet of net leasable area, and nearly 44 million square feet in its development pipeline.