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A Skytrain travels past the downtown skyline in Vancouver, B.C., on Friday May 22, 2015.DARRYL DYCK/The Globe and Mail

Two of Canada's largest pension funds are cashing out of some of their Vancouver office properties as workspace prices soar amid an influx of offshore capital.

Healthcare of Ontario Pension Plan (HOOPP) is selling Willingdon Park, a one-million-square-foot, nine office-tower business park in Burnaby, B.C., according to people familiar with the deal. In the same area, Ivanhoé Cambridge, the real estate investing arm of Caisse de dépôt et placement du Québec, last week brought to market Metrotower 1 and 2, the people said, asking not to be identified because the negotiations are private.

The funds are seeking about $400-million for each property, the people said. HOOPP couldn't be reached for comment and a representative for Ivanhoé Cambridge declined to comment, as did brokerage CBRE Group Inc., which represents both pension funds in their deals.

Vancouver's office buildings are a hot commodity, with deals driving valuations beyond other North American cities this year. Transactions include Brookfield Property Partners LP's sale of the Royal Center for $428-million, and the purchase of the Bentall Centre, which was valued at more than $1-billion, by Anbang Insurance Group Co. of China.

Capitalization rates, a measure of yield on property investments, have fallen to as low as 3.5 per cent in downtown Vancouver from 4.3 per cent a year ago, according to a second-quarter report from Colliers International. That's one of the lowest in North America. The cap rate, or net income divided by property price, drops as buyer demand rises.

The surge in commercial valuations come as residential prices also soar, prompting the government of B.C. to impose earlier this month a 15-per-cent tax on foreign investors in Metro Vancouver's housing market.

Willingdon Park opened in 1985. HOOPP purchased the remaining 50-per-cent stake in the property in 2004 for $80-million. Ivanhoé Cambridge is looking to sell its remaining stake in the three-tower Metrotower office complex, after selling a building to Metro Vancouver, the regional government, for $205-million last year. Metrotower 1 and 2 are 28 storeys and 30 storeys tall, respectively, and have about 616,000 square feet.

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