A $170-million Costco shopping/condo complex between the Georgia and Dunsmuir viaducts will likely pave the way for more mixed retail and residential developments in downtown Vancouver, predict real estate and construction industry insiders.

“That’s a reflection of a very high cost of land in downtown Vancouver,” said Phil Boname, president and chief executive officer of Urbanics Consultants Ltd., a local development consulting firm.

Vancouver-based Concord Pacific Group Inc. is developing the four Costco towers as part of its Concord Pacific Place project. The 150,000- sq.-ft. Costco store at ground level is slated to open between the two bridges in 2006. Four residential towers, ranging in height from 26 to 32 storeys, are expected to be ready by 2007.

Costco owns the store site, while Concord Pacific is pre-selling the towers through an in-house sales team. According to a Concord Pacific spokesman, 90 per cent of the units have already been sold.

Bayne Stanley, Business Edge
Urbanics Consulting president Phil Boname checks out the site of the new downtown Costco shopping/condo complex.

Boname said large retailers who want to move into the large and ever-expanding downtown Vancouver market will have to plan their stores in conjunction with residential development.

“Costco couldn’t afford that site as a freestanding site,” said Boname, a former B.C.-region CEO for Marathon Realty, a previous owner of the site. “It’s much too expensive.”

He said the Costco project is “very unusual” because of its large size. High-rise developers face land costs of $60-$70 per square foot of allowed building area, and costs are not going to fall.

“It can’t be anything but positive, given that there’s nothing there now,” said Boname. “Costco will be a strong addition to an area that is, at best, in transition.”

The site has been undeveloped for about 37 years since Canadian Pacific Railway, the former owner, cleared away its tracks. Boname predicted that the towers could spur future projects on adjacent properties that will almost double the downtown area’s population to 150,000 from 85,000 over the next 20 years.

He speculated that one of those new residential developments could occur on the adjacent B.C. Place Stadium site.

“Right now, it’s not a financially viable property,” said Boname, referring to the fact that the stadium, the home of the B.C. Lions, does not generate many activities other than Canadian Football League games.

The Costco complex will contain 900 units ranging in price from $130,000 (for a 483-sq.-ft. studio) to $375,000 for a 960-sq.-ft., two-bedroom condo.

Although other neighbourhoods such as Kitsilano have opposed big-box retail developments, Costco has apparently gained acceptance because it caters primarily to businesses.

Boname said consumers are willing to put up with some of the difficulties of a downtown setting, such as less parking.

“This is what we call accommodation – accommodation of land, accommodation of physical constraints,” said Boname.

But he said it’s important to bear in mind that the Costco development is just one segment of a much larger area. Although the market is there, the question of whether you can accommodate it is a “quite a different matter.”

Ivan Tsao, Concord Pacific’s marketing director, said the Costco complex will revitalize the area and bolster a master plan that includes parks, schools and a community center. The towers could not be built without Costco, said Tsao, because of a 45-foot escarpment that runs parallel to Beatty Street. The store will literally serve as a base for the towers.

“Costco was looking to do a downtown Costco store, and right in the downtown, there isn’t a lot of sites that can accommodate them,” said Tsao. “It just so happened that (Concord Pacific Place) is the right fit.”

Although a conventional Costco is planned, Tsao predicts the downtown store will be different from the chain’s typical suburban outlets, which tend to sell products in bulk.

“That kind of merchandising is not going to work in the downtown, I don’t think,” said Tsao.

In addition to the Costco store and four towers, the complex will feature 44 townhouses, which will contain lofts that can be used for home and work purposes.

Known as the Spectrum because of its multi-coloured glass, rather than the light green that dominates most downtown buildings, the site will also have two levels of underground parking below Costco and two levels of parking above the store.

Tsao said the structure will be quite different from other residential-commercial developments because the homes and store will be totally separate from each other and accessed by different entrances.

“If you’re living in the Spectrum towers, you won’t actually know the store is below you,” said Tsao.

The project is also slated to include an 80-foot swimming pool and an in-house movie theatre.

Tsao predicted that more large mixed residential- commercial developments will become the norm because people want to live, work and shop in the same area.

Peter Simpson, chief executive officer of the Greater Vancouver Home Builders Association, said Concord Pacific Place is fast becoming a model of how cities should be built.

“I think it’s going to become the norm,” said Simpson. “Mixed use is becoming quite popular.”

But Simpson said the idea of a combined large-scale retail and residential complex is not new. A similar project, involving a retail outlet and a seniors home, was planned in the Toronto suburb of Don Mills in the mid-1980s, but fell through.

“It was one of those ideas that came out and was probably a little ahead of its time,” said Simpson, who was living in Toronto and working in the building industry at the time.”Other Vancouver areas, such as Kerrisdale, which has condos above a London Drugs store, have combined large residential and commercial complexes.

Concord Pacific has also developed condos above an Urban Fare upscale supermarket at the foot of Davie Street near English Bay.

Concord Pacific is also developing residential properties next to the Costco towers. But the Coopers Park and Creekside Park sites will not feature commercial developments, said Tsao.

The Creekside project is situated along the route of the annual Molson IndyCar race. Tsao admitted it’s inevitable that the race will have to move from Concord Pacific’s land, although likely not for several years.

The future of the race is already in jeopardy because of concerns about the route’s availability, conflicts between the CART and Indy League racing organizations and uncertainty about its Molson sponsorship. Calgary’s Race City Speedway is also vying to host the IndyCar event.

Noting that the company has backed the race from day one as a sponsor and venue provider, Tsao said it’s up to CART, which operates the race, and the City of Vancouver, to come to an agreement on the race’s future.

“We would love to see it stay, but whether or not it does is not within our control,” said Tsao.