Are big city downtown gas stations on the way out?

Vancouver's last downtown gas station is up for sale, and the rising cost of property in other major Canadian cities is putting similar pressures on gas stations elsewhere. But will cities like Toronto, Calgary and Montreal follow Vancouver's example?

Gas pumps can't compete with condo development when real estate values skyrocket

This Chevron gas station at Georgia Street and Bidwell Street in Vancouver closed late last month. The only other downtown station is up for sale. (Christer Waara/CBC)

Vancouver is set to lose its last downtown gas station, as the Esso at Burrard Street and Davie Street is now listed for sale. Late last month, the only other place to fill up in the city's downtown area closed.

The surging cost of real estate in the city is adding pressure to shut down businesses like gas stations, sell the properties, and build dense, lucrative developments like condominiums.

And the pressures aren't just in Vancouver. Toronto's downtown gas stations may also be threatened, according to a local real estate agent specializing in commercial deals.

"Some have closed. Some are being redeveloped. We do have gas companies that come to us and speak about what is the potential for sale," said Mike Czestochowski, executive vice-president with CBRE in Toronto.

"We've seen tremendous jump [in land values] in the last 10 years, and that's really driven by demand for condos," said Czestochowski.

The Vancouver Esso station doesn't have a listed selling price, but it was valued at more than $36 million last year, according to B.C. Assessment.

In Toronto, there are still a handful of spots to fill up downtown, and for the most part the land value hasn't risen to the same level as Vancouver

One Toronto Shell station, located at 38 Spadina Ave. was assessed at $8.4 million last year. Across the street, the Petro-Canada was assessed at $18.2 million.

But according to Czestochowski, owners are looking at their businesses, and considering what sort of other opportunities exist beyond keeping vehicle tanks topped up.

"Like any business, they look at the volume they do in terms of the gas business," he said. "There is pressure to look at the performance and say, 'Is the land worth more than the actual businesses?'"

Czestochowski said some of his potential customers are considering the possibility of closing one downtown site and opening up two or three suburban sites for the same price.

Changing face of transportation

Gordon Price, former Vancouver city councillor and fellow at the Simon Fraser University Centre of Dialogue, says the current business model for gas stations is under threat.

"Some would say this is the end of the gas station in downtown Vancouver, but really, it's the end of the suburban model for gas stations — the idea where you take the good part of a block, pave it over, put up a few gas pumps and a mini-mart," said Price. "That model, given the land values, is clearly over."

Price can foresee a not-too-distant future when traditional gas stations disappear, and a new style of business emerges in their place.

"I do think there is an opportunity for something like an energy supply depot, a place where you might get ... gas and other fossil fuels if you need them," he said.

"Maybe it's a place you get other transit services [like fares], as well. Maybe it's a place where you sign up for public bike share — a full utility."

"When you go to places like Europe, certainly Asia, they've been through this before — high land values and very dense urban environments. You see a very different way to get some gas. Sometimes it might just be a pump on the sidewalk," said Price.

Vancouver leading the way

Neither Price nor Czestochowski see the same threat to downtown gas stations immediately spreading to other major cities like Calgary and Montreal.

Calgary technically doesn't have any fill-up stations in its downtown neighbourhood, but two stations to the southeast are close and accessible from downtown.

The Gas Plus station at 204 11th Ave. SE was assessed at $2.4 million last year, but the nearby Esso station at 1201 1st St. SE is worth more than $13.4 million.

In Montreal, the Esso at 1030 Mountain St. was assessed at just over $4 million and the nearby Esso at 3440 St Laurent Blvd. was assessed at nearly $5 million.

Some stations are sitting on valuable land, but Czestochowski, who focuses his work on the Toronto market, doesn't see Calgary and Montreal heating up too much.

"It's more going to be a phenomenon that we see in Toronto and Vancouver for the time being," he said. "Long term, it's possible that they'll see that type of growth and that increase in density."

But only downtown Vancouverites will have to drive the extra kilometres to tank up once the final station closes.

"Vancouver would be an exception, only that it's so extreme because of land values," said Price, whose only lament about the station closure is that he'll lose another place to inflate his bike tires.

Follow Rafferty Baker on Twitter: @raffertybaker