Kelowna’s home market has made plenty of headlines, but the city’s commercial real estate market has been no slouch either, with office vacancy rates dropping steadily from last year.
“I have been in this business since 2009 and I have never seen it this busy,” Royal LePage Realty’s Steve Laursen said.
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Kelowna has become a hotspot for investors, said Laursen, who specializes in commercial real estate.
“Right now we see a lot of investors coming in from Vancouver because cap rates in Vancouver are so low, prices are so high and a lot of these people come and vacation here in the summertime and they’ve watched the growth of Kelowna over the past three years,” Laursen said.
With commercial sales on the rise, those on the front lines credit mixed-use developments for driving the market.
“It makes sense to have commercial property on the main floor, it draws people in, it is also a great look for a building to have that,” Commercial Finders Group owner Steve Harvey said.
A second-quarter office market report by Colliers International showed that there’s been an increase in mixed-use development projects that have upper-level office space throughout the Thompson-Okanagan region.
In Kelowna, the growth has been driven by a number of new tech companies that have increased demand for office space, the report said.
The city’s office vacancy rate dropped from 9.08 per cent in the fourth quarter of last year to 8.78 per cent in the second quarter of 2017, it added.
Colliers noted that Kelowna has added 130,000 sq. ft. of new office space since the end of last year, and it’s set to add 13,500 sq. ft. more.
The One Water Street project is just one of the mixed-use developments coming on board.
The project features Kelowna’s two tallest buildings, which stand at 36 and 29 storeys.
It will be located on the corner of Ellis Street and Water Street and include commercial space on the ground floor.
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The Ella development, a 20-storey condominium project to be built at the corner of Ellis Street and Lawrence Avenue, will also feature commercial space.
Meanwhile, the old Bargain store on Bernard Avenue is also slated for development after it sat empty for seven years.
While few details have been shared about that project, the developer told Global News that the new building will be a mix of residential and commercial space.
No slowing down
Experts believe the commercial real estate market will stay strong for some time.
“With all economic factors the commercial index continues to rise in my opinion, we are not seeing any slowdown in that,” Harvey said.