A shortage of land and a growing economy fuelled a 47-per-cent surge in the value of commercial real estate sales across British Columbia's Lower Mainland in 2016, says the head of the region's real estate board.
Figures released Monday by the Real Estate Board of Greater Vancouver show sales involving commercial real estate reached nearly $13 billion last year compared with $8.8 billion in 2015.
The report also measured a 21 per cent spike in the number of sales involving commercial real estate over the same one-year period.
"It's really the confidence in the B.C. and Vancouver economy," board president Dan Morrison said.
"It's no surprise that we see the same thing happen with commercial properties as has been happening for residential properties."
Robert Levine, a principal with Avison Young, said the surge was the result of a "perfect storm."
"We have a lot of Canadian institutional investors that have felt over the last few years that Vancouver is very highly priced compared to other locations they can go to in Canada and the us," he said.
"They see these prices and say we should cash out because we think it can't really get much better than this."
Impact of foreign buyers tax unknown
Residential real estate prices have skyrocketed across the Vancouver area in recent years, prompting the B.C. government to introduce a 15 per cent tax on foreign buyers last summer on homes purchased by anyone who isn't a citizen or a permanent resident of Canada.
Last week, the government announced it was tweaking the law retroactively so that foreigners who come to B.C. through the provincial nominee program won't have to pay the tax, which also doesn't apply to commercial property.
Asked if the foreign buyers tax has affected commercial real estate sales, Morrison and Levine said it is possible speculators have redirected their investments from residential to commercial properties, but there is no data to back that up.
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"I would attribute it more to the economy than anything else," Morrison said.
NDP housing critic David Eby says it's another example of why the government needs to step up data collection on all property transfers.
"As far as we know the province isnèt collecting any data about these sales. We're one of the few provinces that doesn't collect this type of information and we really need to know what is driving these prices," he said.
"There are a lot of small businesses in his constituency facing huge property tax hikes because the perceived value of their property is higher. It's driving a lot of small businesses out of business."
With files from Brenna Rose