U.S. shared-workspace firm WeWork Cos. Inc. has leased 80,000 square feet across five floors at Bentall 3, and four of those floors – or about 64,000 square feet – are for a single company.
Speculation will soon end as to whether the company is Amazon, Microsoft or some other firm, but word on the street pegs the tenant as a tech firm. The point recently had Jones Lang LaSalle (JLL) speculating as to whether Vancouver has the capacity to accommodate the tech companies on which it has pinned its hopes.
SwissReal Group’s much-discussed Exchange project at 475 Howe Street has given over nearly a third of its 369,000 square feet to hotel use, despite JLL noting that it’s the last new tranche of downtown space till at least 2019.
Yet when ground broke on the Exchange in early 2014, Mayor Gregor Robertson boasted that it was a sign of the city’s foresight, noting that tech firms would “be very visible in this new building.”
Meanwhile, WeWork is catering to a workforce that’s gone mobile.
During a hard-hat tour of the tenant improvements at Bentall 3, WeWork public affairs director Taylor Patterson said companies seeking flexibility and convenience drive demand for its collaborative yet discrete spaces. She cited Microsoft and Airbnb as prime examples as well as digital media and post-production companies.
“In this particular market, we’re seeing tremendous enthusiasm,” Patterson said. “I don’t think we will be able to build out space fast enough.”
WeWork is scouting additional space but has yet to secure locations beyond Bentall 3. Patterson wasn’t sure if WeWork had considered the Exchange.
Slim pickings
The latest investment stats for Greater Vancouver highlight the dearth of available office property on the market.
Altus Group reported that $3.4 billion in properties worth $1 million or more changed hands in the second quarter of this year, equal to the volume in the year’s first quarter. Ivanhoé Cambridge led the way with its $274.4 million sale of Metrotower 1 and 2. Yet the overall volume of office and retail deals dropped 32% between quarters, driven largely by a decline in retail properties.
The picture in Real Estate Board of Greater Vancouver statistics is even more dire. While its numbers point to a 32% decline in total transactions to 595 deals worth $2.9 billion, office and retail fell a whopping 57.7% to just $775 million.
CBRE Ltd. reports that foreign investment accounts for 45% of all commercial transactions over $10 million.
Mixed signals
Resales of homes in B.C. this year should total more than 100,000, according to British Columbia Real Estate Association forecasts, or about 10% below last year’s record of 112,209 sales.
Whatever the number, current experience of market conditions is another matter, however.
“We are now experiencing one of the most intense periods of execution and sales in our company’s history,” Scott Brown, president of Fifth Avenue Real Estate Marketing Ltd., wrote in the firm’s second-quarter report on the new-home market. “From informal chats with many industry colleagues, we aren’t the only ones experiencing the somewhat abnormal.”
Supply isn’t meeting the demand for housing, he said, and social media amplifies the lament of disappointed buyers whose dashed hopes – even for condos – help keep sales in check.
“Prices are rising and yet multi-family homes continue to absorb. This isn’t just a new-home phenomenon; it is occurring in the resale multi-family market as well,” Brown said.
On the other hand, Will Dunning, an Etobicoke-based economist who analyzes the B.C. market for Landcor Data Corp. in New Westminster, said factors such as the foreign-buyer tax, federal stress-testing of mortgage applicants and general market uncertainty have chilled the market.
With resales per capita averaging 2.9%, or 15% below average, Dunning says the market is “weak” rather than “abnormal.”
