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Flashback 1992, New York Times: The Japanese Are Building In Vancouver
May 27, 1992
Real Estate; The Japanese Are Building In Vancouver
By HARRIET KING
JAPANESE investors are carving out an area for commercial development in Vancouver on the western edge of the downtown business district. It centers on Alberni Street, with stores and other projects that cater to wealthy Japanese visitors who fly in on tours and are whisked there by tour buses to shop.
The retailing lure has been strong enough to drive one Japanese company, Ueshima Enterprises Ltd. of Kyoto, to plan a major mixed-use building. Two stores with 17,500 square feet are to be key components in a $20 million, 140,000-square-foot hotel for which the company plans to break ground this summer. The hotel will have 183 rooms and 18 apartments.
Over the last two years, the block between Burrard and Thurlow Streets has been transformed by such boutiques as Sapporo Canada and Saitoh, which offer expensive international designer clothes, furs, perfumes and gifts. Nine Japanese restaurants -- the Grand Fortune is one -- have also opened above the shops.
Vancouver residents typically say they cannot afford to shop there. But the Japanese, who can spend $3,000 duty-free, say prices are bargains in comparison with those at home. Some stores close on days when no buses are scheduled.
The hotel is in the middle of the block. Last year Ueshima cleared the site but the company deferred construction until now because of the poor Japanese economy.
"Retail is the key," said Ronald Lea, the architect who is with the Musson Cattell Mackey Partnership in Vancouver. "It would be difficult to put a hotel on the site and make money without retail space, because the land cost is so high at around $75 a buildable foot." The hotel and lobby will begin on the third floor.
Alan Kwinter, a broker with Colliers, Macaulay Nicolls Inc. who is leasing the hotel's retail space, expects the next development to be at the adjacent Kobe Steak House. The restaurant has been at the location for many years and was the first Japanese business on the block. Saitoh Ltd., a Japanese company, owns the Kobe land and is negotiating to sell the property to Kobe.
"The low-rise Kobe building is no longer in character for the street," Mr. Kwinter said, "although it is tough to know what Saitoh or Kobe will build." One possibility would be for the restaurant to be relocated to the second floor of a new office building development, where leases are cheaper at $30 a square foot -- one-third the $90 a square foot charged for Alberni's street-level retail space, the highest rent level in the city.
Saitoh has already staked out a prime retail location at Alberni and Burrard Streets as a tenant in a building constructed recently by the Bon Street Group. Other tenants there are also Asian -- North Pole Sales, a gift shop, and Seaborn, a fish processing company that ships smoked salmon and sashimi to Japan.
Bon Street is a major Alberni developer that has Canadian, not Asian, partners. The concern mystified real estate brokers when it erected a four-story retail, restaurant and office building instead of an office tower similar to ones that shadow the street. But the partners acknowledge they built a gold mine: retail sales are about $1,200 a square foot compared with $400 a block away on the trendy Robson Street, where stores are popular with local residents and tourists.
Jeffrey Whitlock, Bon Street vice president, said: "We built the retail space to crystallize our holding on the land. Major new office buildings won't be needed for four to five years out." The building could be torn down in five years or the firm could transfer 66,000 square feet of density to another Alberni developer, if the city approves.
Robert Lee, director of market research at CB Commercial, says the time has come for Alberni Street because "Expo '86 put Vancouver on the map."
"A lot of Japanese are coming back to open shops, to invest in real estate or to enjoy the city as tourists," he continued. "We have not seen this kind of development exclusively for the Japanese market anywhere else in North America."
The Japanese have long made investments in British Columbia industrial companies like manufacturers of forestry products. A leader in steering new money to the city was the Tokyu Corporation, which built the Pan Pacific Hotel in time for Expo '86 at the new Convention Center.
Investments by other Asians followed in outlying resorts, and near downtown, the Aoki Corporation of Tokyo acquired the Westin Bayshore when it bought Westin Hotels and Resorts. Aoki will break ground this fall on Bayshore land for 1.1 million square feet of residential space, 36,000 square feet of retail space and a 150,000-square-foot hotel expansion.
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