The Pacific condo development is one of Grosvenor's projects.Grosvenor
British developer Grosvenor has been selectively building in B.C. for more than 70 years, beginning with the industrial park on Annacis Island and in more recent years, the downtown luxury tower The Pacific. Under new international chief executive officer James Raynor, the company is ramping up its presence in the province, a move that underscores the reshaping of the residential development industry.
Mr. Raynor says he wants to double the company’s cash-flow growth over the next five years, and has his sights on Vancouver as a market for expansion. London-based Mr. Raynor was in Vancouver last week to visit with the team and took time to talk with The Globe and Mail.
“I looked at where I felt that we had genuine strength, some kind of competitive advantage, where we had the ability in a way, to punch above our weight,” said Mr. Raynor, who started out with Grosvenor in their Paris office 22 years ago and was previously CEO of Grosvenor Property U.K., overseeing London estates of Mayfair and Belgravia. The company has real estate investments and partnerships in countries around the world, but directly invests and develops properties in the U.K. and Canada.
The British company developed the industrial park on Annacis Island.Grosvenor
“You might argue that if you started from a blank sheet of paper and you looked around the world, would you immediately come to Vancouver? Would that be your first choice? But I think, for me, it’s different. We’ve been here for 70 years, so we have a brand recognition here. And I think that is important,” he said.
“If we go to New York, we’re a tiny player. How do we create any level of significance in that scale of market? But in this scale of market, I feel – and you know, actually it’s not a small market, it’s a significant city within Canada – but we can have an impact.”
The condo market is undergoing a major restructuring, a permanent shift, according to industry professionals such as CIBC chief economist Benjamin Tal, who told The Globe recently that a lot of “big players” are entering the Toronto and Vancouver markets, buying up all types of real estate assets and holding them while the market finds its footing.
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Family-run companies such as Grosvenor, free from shareholder pressure to deliver quarterly returns, are among those investors reshaping the market. Spanish billionaire and founder of clothing chain Zara, Amancio Ortega, recently purchased The Post building in downtown Vancouver for a reported $1.1-billion. The former owner, QuadReal Property Group, stayed on as property manager, with Amazon as the anchor tenant. In 2024, Mr. Ortega’s company, Pontegadea, also purchased Beedie Group’s Big Bend industrial site in Burnaby, B.C., for a reported $360-million, and in 2022, the company purchased the Royal Bank Plaza building in Toronto for more than $1-billion.
“This is patient money,” Mr. Tal explained. “This is money that can wait.”
For those deep-pocketed companies that can buy residential sites, the long-term play will likely pay off, he said.
“The demand is not there in any significant way, and that will change over time. But what they are counting on, and I think they are right, is that we are building zip now. We are building nothing, relatively speaking, which means that, two or three years from now, the demand will still be there. Prices will start rising. … I think that’s what they’re counting on.”
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For buyers, there will be a welcome shift away from tiny units that didn’t work for families or couples who work at home. Investors will represent a far smaller segment of the condo market, which means end-users – people who intend to live in the units – will likely dictate unit sizes. Developers who build two- or three-bedroom units could have the advantage, Mr. Tal said.
“One cannot live in a closet.”
Grosvenor’s history with B.C. started in the 1950s, when it purchased Annacis Island and created an industrial park. It then co-purchased and renovated Broadmead Village shopping centre in Saanich and, in recent years, the centuries-old development company, owned by the Duke of Westminster, Hugh Grosvenor, built the residential rental and retail building The Rise at W. 8th Avenue and Cambie Street; Grosvenor Ambleside in West Vancouver; condo and townhouse project Connaught in North Vancouver; The Pacific luxury condo tower downtown, and, currently under way, the Brentwood Block master-planned community in Burnaby. This week, the company announced it now fully owns Broadmead Village.
Broadmead Village, initially co-purchased and renovated by Grosvenor, is now fully owned by the developer.Grosvenor
Grosvenor’s long-term plan is to reinvest in its properties and expand. It is doing so in a market that’s no longer driven by opportunistic players. Those days are over.
“My view is things are a lot more asset-specific now than they used to be,” Mr. Raynor said. “I think that what you’re seeing across markets is a bifurcation between the performance of good quality assets and average assets. If you go back historically, everything sort of followed a broad cycle. And anything you bought at a low point would do quite well. I’m not entirely sure that that’s the case any more.”
There are investors and developers who are realizing that the business isn’t so easy after all, he said.
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“They thought it was about just buying something, sitting on it for a few years and selling it at a profit. It turns out that actually genuinely owning and managing property is a skill and that you need to have some real perseverance.”
As those secondary players fall away, new opportunities will arise, he said.
“Whether they fit with what we plan to do, well, that remains to be seen.”
A rendering of Brentwood Block - currently under construction - which includes 1,279 rental units and 451 condo units.Grosvenor
A key part of Grosvenor’s Metro Vancouver portfolio is the 7.9-acre Brentwood Block, which includes 1,279 rental units and 451 condo units, many of them two-bedroom, Mr. Raynor said. The company launched presales for the condo units about a year ago and are about 35 per cent sold.
They’ve gone to market at a time when an estimated 2,500 new condo units are sitting unsold in Metro Vancouver, according to Canada Mortgage and Housing Corporation, although some estimates put the number much higher. The lacklustre market is largely attributed to a lack of interest from investors who, a few years ago, could flip units before they were completed and make a profit, or obtain rents that could cover mortgage payments. But Grosvenor managed to sell out its luxury downtown tower when the high-end downtown market was on the decline. And Mr. Raynor is hopeful that sales momentum for Brentwood Block will pick up, particularly around Chinese New Year in mid-February, and be followed by followed a spring market that is more active than last year.
“I feel up for the challenge,” he said. “What we’re seeing, I think, is that, possibly our timing is okay because others are clearly pulling back from developing. Whereas, we’ve decided that we will continue.
“If the market was easier, then I’d be happy, for sure. But ... I think we’ll be okay. I think we probably won’t necessarily get the prices we thought we would get three years ago, but we’re still committed to going forward with it.”