Going down, downtown
Triple-A office vacancies in Vancouver continued to decline in the third quarter. Preliminary numbers from Cushman & Wakefield indicate a dramatic drop in the city proper from 4% to 1.4% during the period, with the downtown core tightening slightly from 2.7% to 1.7%.
The tightening downtown is even slighter when real numbers come into play. With a total inventory in the core of 27 million square feet, Cushman & Wakefield reports that total downtown absorption in the third quarter was just 14,439 square feet.
With so little space available in the core, tenants have looked to the Broadway corridor and beyond, where absorption totalled 202,188 square feet.
Statistics from Colliers International paint a similar picture.
Just 11,599 square feet of triple-A space is available in the core, for a 6% vacancy rate and an availability rate approaching nil. Gastown, Railtown and Yaletown have zero vacancies in A-class space, driving tenants to Broadway, which saw 148,646 square feet of absorption in the third quarter. This was the biggest portion of the market’s 161,049 square feet of absorption. Corridor vacancies fell from 4.3% in the second quarter to 3.6% in the third quarter.
The strength of the market underscores the demand for new construction, of which 2.2 million square feet is on the go downtown. This is drawing the likes of not only high-profile tenants such as Amazon and WeWork Cos. Inc., but also professional firms including Ernst & Young, Blakes and DLA Piper, which have signed for a total of 207,000 square feet at Oxford Properties Group’s new office tower at 1133 Melville Street.
An additional 375,048 square feet is being built elsewhere in the city, primarily in the Broadway corridor, which is slated to see increased construction as the Millennium Line extension gets rolling.
Demand for space outside the core could be partly met on Granville Island, where Canada Mortgage and Housing Corp. (CMHC) is seeking to develop an arts and innovation hub on the north side of the old Emily Carr University of Art + Design campus.
CMHC issued a call for ideas on September 1, a week after hosting a tour of the site for interested parties and prospective tenants. Registered attendees included not-for-profits such as the Red Gate Arts Society, Langara College and groups supporting entrepreneurs such as Vancouver Hack Space.
CMHC has been raising awareness of its plans for the 120,000-square-foot building since June. A mix of tours and presentations culminated in the call for ideas, which will lay the foundation for parties to submit expressions of interest in 2019. If all goes well, CMHC will complete redevelopment and welcome new users to the site in 2021.
Civic elections can often get in the way of getting things done. Candidates prefer to court voters, not controversy. For those who’ve been around for a term or two – or more – the more distance put between council discussions, decisions and the proverbial stump, the better.
Vancouver, for example, isn’t saying how many audits it’s undertaking to verify declarations made as part of its empty-homes tax initiative until after the civic election. The city expects to collect an additional $12 million from the program. To date, it has collected $18 million, generating net proceeds of $8 million. This puts the implementation costs at approximately $10 million.
City businesses will also have to wait until after the civic election to learn the route for a controversial new arterial through the False Creek Flats.
This spring, the city asked the Jefferson Center of Minnesota to undertake a public consultation on the route. It circulated an update last week that “important stakeholders like you” (me? really?) persuaded it to select 42 community panel members at the end of the year.
Given the concern surrounding the route, which will affect food distribution businesses along Malkin Avenue, local residents and green space, Jefferson Center no doubt thought it wise (as sources have mentioned to Business in Vancouver) to steer clear of the civic election.•