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property report

A drawing of the Ironworks project

Farmboy Fine Arts had outgrown its leased office space, and owning in pricey Vancouver didn't seem to be an option.

But along came Ironworks, a new type of project that offers strata title ownership of office and industrial space. It's marketed as "stacked industrial," a vertical, midrise take on industrial spaces that includes one-third office flex space.

The site for the project, which is in presales, is in an industrial area on Vancouver's east side, within walking distance of coffee shops and restaurants on Commercial Drive. It's also central, with access to transit for employees.

In Vancouver's skyrocketing property market, the stacked strata concept is aimed at small- to mid-sized businesses like Farmboy Fine Arts, which had been looking for a way into the market.

(In British Columbia, strata is a popular form of residential property ownership, in which property owners own their individual lots and share ownership of common areas and assets, as a strata corporation. It's less commonly used for commercial and industrial properties, but with land prices soaring, that's changing.)

"There's the appeal of ownership and it's just a matter of price point that makes sense, because the best use of your dollars is reinvesting in your business," says co-owner Tim Gudewill. "It's a perfect space for a creative community, and for young millennials to attract businesses," he says.

The developer, Conwest Development, began marketing presales last year. Instead of selling off the units for the highest price, buyers were screened to ensure that they would be owner-occupiers, not investors or speculators. They had to be local businesses that would contribute to a community vibe within the building.

As well, buyers are not allowed to "assign" their units, which means selling to someone else prior to completion. Because a strata building follows provincial strata bylaws, the building's strata council will have some ability to regulate others who buy in down the road.

The novel approach appealed to Mr. Gudewill, who had been leasing for 12 years.

His Vancouver-based company supplies fine-art reproductions and leases original works to hotel chains, offices, hospitals and other institutions in Canada, the United States, the Middle East and North Africa. The company does a lot of work for big hotels in Las Vegas.

Farmboy purchased a 3,500-square-foot unit and expects to take possession in 2019.

The finished overall project will consist of two three-storey buildings with floor-to-ceiling windows. There will be two loading areas and parking spaces for each unit. Prices range from around $350 to $600 a square foot, which is affordable enough that the buildings are already more than half sold. The developer says it has held off on selling the remaining units until the project is further along.

The city-block-size site – formerly a historic iron foundry, then a film location – is still in the early stages of excavation and construction. Ben Taddei, chief operating officer for Conwest, says he's turned down several offers from buyers.

"We are being very selective on the types of buyers that purchase here, because we want to make sure they are active businesses, and they bring vibrancy and life to the building," he says. "We think we are providing a product that fills a niche and a need. And I think for that small-business owner that wants to purchase his or her own property in an urban setting, we are filling a gap."

Part of the appeal is the unconventionality of the units. Mr. Gudewill's office space will be bright and contemporary, with 22-foot-high ceilings and a mezzanine. There will be common areas for barbecues. Mr. Gudewill says it's easy enough to find space to lease in Vancouver, but he didn't want the traditional office space with cubicles. Young businesses have different needs.

"The days of working under yellow fluorescent bulbs are behind us. There are tons of vacant spaces in Vancouver, but people want to be in an activated space."

Architect Marie-Odile Marceau was one of the first to buy into the project. She was driving by last fall and noticed a sign for industrial strata units. She'd been looking to relocate for seven years.

"It's tough to find the type of property that works, at a price I could afford. The fact that this is a strata development means the capital cost is reduced. And it ended up at a level that worked for me."

Tsur Somerville, of the University of British Columbia's Centre for Urban Economics, says the concept of office and industrial space combined makes better use of land, than, say, using industrial land for a car dealership.

"Being able to stack different types of uses on top of an industrial space is a way to make that industrial land more financially attractive and preserve industrial opportunities," he says. "What's old is new again, in the sense that at one time we had all this mixed together."

Developer Brent Sawchyn, principal at PC Urban, is proposing a smaller version of stacked industrial at 1055 Vernon Dr., on a 33,000-square-foot property. He's applied for a development permit to bring a three-storey building with 12 to 16 strata units of about 2,500 square feet each to market. He says it's a similar concept to the Conwest project. It reminds him of the historic stacked industrial buildings in his hometown of Winnipeg.

"The idea would be to echo how industrial and manufacturing occurred 60 or 70 years ago."

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