British Columbia Auto Dealer Accelerates Into Residential Real Estate
OpenRoad Auto Group Creates Division After Seizing Development Opportunity at Showroom Site
British Columbia's largest auto dealership sees residential real estate development on the road ahead in the most expensive Canadian market.
OpenRoad Auto Group, which has 34 full-service retail locations, said it launched OpenForm Properties in conjunction with its latest project in greater Vancouver.
OpenRoad spends $100 million annually on construction, so"they've always had dealerships that are either being built or renovated. It's a big part of what they do, the development side," OpenForm President Norm Shearing told CoStar News.
The genesis of the new real estate division came three years ago when the auto group outgrew its site on Kingsway in Vancouver and built a residential development on the land.
Later, the site for a project called Highgate Tower in suburban Burnaby, British Columbia, "became available for redevelopment, and it worked well on every level," said Shearing. The condominium and rental home complex comprises a 40-storey tower and six-storey building now in a rezoning approval stage. The city supports the change, and the company expects to go to market in June 2022.
The developer's newest deal is for a Vancouver property at 320 E. 15th Ave. that was once home to St. Matthias and St. Luke Church. The site is poised to eventually be a collection of 49 townhouse-style residences.
"This project came along from just picking up a great piece of land in the Mount Pleasant area," said Shearing, a real estate veteran who was brought into OpenRoad in 2018. "We are looking at other sites and have other sites under contract. We are young. We are new. We got more serious in the last three years about this."
Founded in 2000, OpenRoad has over 1,400 associates representing 21 automotive brands, with auto retailers in British Columbia and Ontario, plus four luxury brands in Bellevue, Washington.
Shearing declined to go into details about OpenForm's financial backers but said they're the same group as the auto side.
He doesn't see many more opportunities to develop OpenRoad's dealerships and said the Kingsway Honda site was a one-off.
"We are not looking to redevelop existing dealership sites," he said. "We are a company looking for development sites in Vancouver just like everyone else, it seems."
The move into real estate comes with the Vancouver investment market suppressed by the pandemic but still recording quarter-over-quarter growth of 5.6% in the first quarter, CBRE said in a report.
"Vancouver seems to have made a full recovery to pre-COVID levels," the real estate company said, noting multifamily and industrial sales have dominated activity. "Investor demand has increased consistently as COVID has progressed and activity is poised to remain robust into the summer."
Shearing said competition is fierce for any development property, and the church deal was no different.
The site's project, called E15 Just Off Main, is expected to be completed in early 2023. It will include a mix of homes that range from studios to three-bedroom units.
"I think the end pricing on this will address some of the missing middle for prices," said Shearing, who wouldn't say what prices will start at.
OpenForm plans to focus on Vancouver, the priciest market for residential real estate in Canada. The Real Estate Board of Greater Vancouver reported in May residential sales were up 342.6% in April from a year ago. Those numbers dipped down 14% from the month before.
Prices also continued to climb in British Columbia's largest metro region, with the home price index composite benchmark for all residential properties $1,152,600 in April, a 12% increase over a year earlier and 2.6% above the previous month.