A downturn in the resource sector has shaken Vancouver junior mining companies and spooked office landlords in the city’s downtown core.
The threat of even more office space going dark – on top of the 250,000 square feet of negative take-up in the last three quarters – is timely as four new office towers break ground.
A survey by commercial real estate company DTZ Vancouver found that junior resource companies (JRCs) occupy 375,000 square feet of downtown office space and, in total, resource companies account for 28% of the total Class A and B space in the core.
Already, junior resource firms have pushed 260,000 square feet of sublease space onto the market, reflecting a widespread downturn in resource stocks and difficulty in securing financing.
“If all JRCs were to vacate their office premises, the [downtown] vacancy rate would increase to 4.9%,” DTZ estimates, adding that this is “a highly unlikely scenario.”
The current downtown vacancy rate is 4.5%, but it has been inching up since the end of last year.
DTZ estimates that 60% of the 1.4 million square feet of new office towers being built downtown is pre-leased.
The latest out of the blocks is the 270,000-square-foot Manulife Financial tower at 980 Howe Street, where BGC Engineering Inc. has taken 70,000 square feet. The 14-storey tower is expected to be completed in 2015. •
