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Telus Sells Stake in Vancouver Headquarters

Cap Rates Low in Downtown Market, According to CBRE
August 7, 2018
National telecommunications company Telus is selling its stake in its downtown Vancouver headquarters, the company said as part of a quarterly earnings release.

The move comes against a backdrop of extremely low cap rates for office product in the downtown core of Vancouver. In a 2018 second-quarter report, CBRE noted cap rates were in the 3.75 per cent to 4 per cent range for what it called AA buildings.

"Office and industrial end-product strata sales are pushing commercial development land prices to new levels," CBRE said in that report.

Telus offered few details about the sale of what is known as Telus Garden other than to say that during the third quarter of 2018, it expects to record a gain of $170 million on its share of the project. Telus occupies about 160,000 square feet in the building, the company has said previously. Amazon is also an anchor tenant in the building.

In 2011, the telecom company partnered as equals with Westbank Corp. in the residential condominium, retail and commercial real estate redevelopment project. The multifamily sector has also seen strong demand, and that same CBRE report has cap rates at 2.5 per cent to 3 per cent for high-rise Class A buildings in the asset class.

At the time the development was announced, Telus said the 1 million-square-foot Telus Garden project would cost $750 million. It encompasses an entire block of prime downtown real estate bounded by Georgia, Robson, Seymour and Richards streets.

The project created 450,000 square feet of office space in a 24-storey tower at 510 W. Georgia Ave., and 500 residential units in a 53-storey tower at 777 Richards St.

Garry Marr, Toronto Market Reporter  CoStar Group   
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