Is the juice worth the squeeze? That may be the question Nova Scotia-based Crombie REIT is pondering as it relates to the Commercial-Broadway Safeway redevelopment in Vancouver.
For the Safeway located at 1780 E Broadway in Vancouver, directly adjacent to Commercial-Broadway Station, Crombie REIT and Vancouver-based real estate developer Westbank have been working on a three-tower project for well over five years now.
According to its financial documents, Crombie REIT owns 100% of the retail component of the project and 50% of the office and residential component, with Westbank presumably owning the remaining 50% of the office and residential component.
Commercial-Broadway Safeway Redevelopment
The original rezoning application for the site was received by the City of Vancouver in June 2019, with a proposal for a 24-storey, 27-storey, and 30-storey tower with a total of 520 market strata units and 160 market rental units, for a total density of 5.53 FSR.
In September 2020, the proposal was changed to three towers ranging from 25 to 30 storeys, with 236 market strata units and 452 market rental units.
In November 2021, the proposal was then changed to three towers between 24 and 29 storeys, with 214 market strata units, 438 rental units, and 93 below-market rental units, for a total density of 5.70.
By August 2023, the rezoning application was withdrawn altogether and a new rezoning application was submitted with a proposal for a 35-storey, 36-storey, and 39-storey tower, with a total of 882 market rental units, 99 below-market rental units, and zero market strata units, for a total density of 7.90. The plans cut out the strata units and also included a new and expanded Safeway, a two-level 32,000-sq.-ft public plaza, a 5,000-sq.-ft daycare, and 50,000 sq. ft of retail and office space.
A rendering of the Commercial-Broadway Safeway redevelopment from 2019 (left) and 2024 (right). / Perkins&Will, Westbank, Crombie REIT
This iteration was first made public in early-February 2024 and it seemed like it was going to be the final version of the project, but then another revision was made a few months later, increasing the proposal to a 36-storey, 37-storey, and a 43-storey tower with a total of 1,044 residential units, consisting of 940 market rental units and 104 below-market rental units, for a total density of 8.27 FSR.
This latest version of the proposal, made public in June, will still include a new and expanded Safeway, a public plaza, and commercial space in the building podiums, although one level of office space that was planned for the now-43-storey tower has been converted into residential space.
With the two latest revisions, the City of Vancouver has noted that the proposal "requests consideration of height and density in excess of the existing policy," and it's unclear whether the City will allow it, particularly considering the opposition to the project.
Shifting Sentiments
Throughout the years, at each step, the project has seen strong opposition from a local group called No Megatowers At Safeway. While their sentiment about the project has been consistent, Crombie REIT's feelings about the project appear to have shifted last year, specifically in the period of time before and after the latest revision.
After the latest revision was unveiled, Crombie REIT President & CEO Mark Holly was asked on the Q3 2024 earnings call on November 7 whether there was any changes to its plans for the Commercial-Broadway project in light of Crombie buying out Westbank from The Zepyhr.
"It is a JV with Westbank," said Holly. "Collectively we've been working on that entitlement for many years. We're optimistic that sometime in the first half of 2025 we'll have that fully entitled for the three towers and about a 1,000 residential rental units. Once we get to that point, we're going to review our options, which will include a monetization of that asset."
The Zephyr at 1661 Davie Street in Vancouver. / Henriquez Partners Architects
There was no follow-up question by Lorne Kalmar of Desjardins and Holly's response appeared to be a shift from comments he made on February 22 during the Q4 2023 earnings call, when he mentioned the Commercial-Broadway project on his own and suggested that Crombie was pleased with the revision to full rental.
"So condo development, yes, we're open to it," Holly said, responding to a question about how Crombie felt about condo development. "In fact, the Broadway and Commercial project at one point had one condo tower and two residential rental towers. We did convert to three rental towers because we think the conditions in that market are keener to rental at this point in time. But yes, we're not shying away from condo. We think they are opportunistic for us to kind of go in and out quickly, but it's not our primary focus."
Institutions are always reviewing their options, but Holly publicly raising the possibility of selling their stake in the project suggests they have already given some deeper thought to it. Crombie's latest financial statements note that it has committed to funding $37,926,000 in development costs on the project, of which $719,000 has been funded as of September 30, 2024.
In 2024, Westbank went on an extensive selling spree, selling large or full stakes in Deloitte Summit, 19 Duncan, The Pendrell, The Zephyr, and M2. Notably, almost all of those transactions occurred between the time of Holly's two comments.
In November, STOREYS reached out to Crombie REIT to elaborate on the monetization option and also reached out to Westbank to ask if they are exploring a potential sale of their stake as well. Neither party responded. STOREYS again reached out to Crombie REIT this week, but again has not received a response.
