Richmond rebound

he iFortune Centre on No. 3 Road is proceeding with 105,420 square feet of office space in a speculative development by iFortune Homes. The project includes a mix with residential towers | iFortune Homes

Residential construction all along the Canada rapid transit line is steadily transforming downtown Richmond from a strip of shopping malls into an urban core with cosmopolitan flair. Part and parcel of many developments is space for professional offices.

But most of the new construction has been strata space sold to local owner-occupiers or investors like so many of the surrounding residential units. Mo Yeung International Enterprise Ltd.’s International Trade Centre development at Versante, a mixed-use project with 97,846 square feet of strata office space at 8477 Bridgeport Road, is but the latest case in point.

“We haven’t seen new lease development since 2008,” says Derek Lee, an associate with Avison Young’s office leasing team who represents tenants seeking space.

The situation is about to change, however, with the 343,000 square feet of leasehold office space set to start with completion by the end of 2020.

The largest is Yuanheng Holdings Ltd.’s plan for 237,832 square feet of office space at 3311 No. 3 Road, which began the development permit process last year.

An additional 105,420 square feet is proceeding without pre-lease commitments at iFortune Centre, which iFortune Homes Inc. is building at 6860 No. 3 Road.

The lack of commitments underscores the tight nature of the market. Avison Young reports that vacancies in Richmond as a whole ended 2017 at less than 10 per cent for the first time in 10 years, but those in the core along No. 3 Road are closer to two per cent.

The result is prime conditions for new office construction to meet demand not only from local tenants, but also from those pushed out from downtown Vancouver, where tenants face equally tight conditions.

“There is some pent-up demand in that submarket,” says Bill Elliott, a principal in the Vancouver office of Avison Young. “A tight-vacancy market needs some more office space, so hence you’ve got some people looking to develop office space in that market.”

The developments also reflect Richmond’s long-standing plans for its downtown, which call for a transit-oriented city. The nine-year-old City Centre Area Plan outlined a vision that saw the displacement of industrial uses around the speedskating oval east to Aberdeen station, as well as around Bridgeport station, clearing the way for office uses oriented to the Canada Line.

The current projects are part of a wave of development set to roll through 2041, according to city planners. Other proposed office developments include:

•Vanprop Investments’ redevelopment of the Lansdowne District in Richmond: its 24 towers will include office space, retail and, of course, residential, on the 50-acre site. This is a long-range plan centred around the existing Lansdowne shopping centre.

•IBI Group/Thind Properties Ltd.’s rezoning application for a mixed-use development at 5740-5800 Minoru Boulevard that will have 161,785 square feet of office space.

•South Street Development Group’s plans for 147,122 square feet at Alderbridge Way and No. 3 Road, a property formerly owned by UEM Sunrise (Canada) Development Ltd. currently in rezoning.

•Beckwith Developments Ltd.’s plans for 110,278 square feet of office and light industrial space at 9466 Beckwith Road.

•Modern International Holding Ltd. plans 99,489 square feet in the 8200 block of Alexandra Road, subject to rezoning.

•Bene Group’s plans for approximately 96,700 square feet in two projects along No. 3 Road, one of which is seeking a development permit and the other of which is in rezoning.

The plans sound good but Richmond economic development manager Neonila Lilova hopes the projects don’t become commercial strata developments in view of the strong demand for that kind of space.

“Through the development permit process we are trying to encourage that more non-stratified leasehold space be provided,” she says. “A company that has 100 employees that’s looking for office space cannot move into a strata building.”

With some companies currently located in Richmond’s business parks growing and seeking expansion space, Lilova says the city needs to be able to provide the space if it wants to keep the companies.

“What we’re trying to do is get that large-floor office space along No. 3 Road in the city centre so that we can accommodate our existing companies that are looking to grow and get anyone that can’t find space in downtown Vancouver,” she says. “Everyone wants to be on the Canada Line, and we don’t have the product.”

This includes linking businesses looking for expansion space with developers, in the hope builders will recognize the need and build projects to meet the demand.

“The development community sees higher-value opportunities in residential,” she says. “Residential is a really lucrative play for development. The funding will continue to go there. But now we’re starting to see more funding going towards those commercial developments as residential is filling up along No. 3 Road.”