Downtown Vancouver office vacancy rates are rising, and pre- construction work has started on the first office towers slated for downtown Vancouver in a decade.
But industry insiders doubt that this will mean lower lease rates for company executives who want to take advantage of increased supply.
At least, not in the short term.
Bentall Kennedy LP vice-president of development Jeff Ranktold Business in Vancouver at the April 11 Vancouver Real Estate Forum that building owners are trying to increase lease rates before four planned office towers are completed in 2015.
"If you're an owner of a building, you'll be trying to capitalize on current supply, knowing that in 2014 through 2016, and maybe beyond, you're always running the risk that a new tower or new development will challenge you on the inventory side."
Pre-construction work has started on two downtown office towers:
•Bentall Kennedy's 400,000-square-foot tower slated for 745 Thurlow Street, at Alberni Street; and
•the 500,000-square-foot office tower that Telus Corp. and Westbank are building as part of the Telus Garden mixed-use project, bounded by Georgia, Robson, Seymour and Richards streets.
Other office towers slated to be built downtown are:
•Oxford Properties Group's slim 35-storey, 270,000-square-foot tower on West Georgia Street that is made up largely of 8,000-square-foot floorplates; and
•Credit Suisse AG and Swissreal Investments Inc.'s 30-storey, 400,000-square-foot tower on West Georgia Street.
Aquilini Investment Groupis slowly pushing along its plans to build an office tower next to its Rogers Arena, slightly east of Vancouver's central business district.
About half of available space in the Telus, Oxford and Bentall Kennedy towers is already leased, and Rank said much of the space being vacated has already been spoken for.
For example, McCarthy Tetrault LLP is moving from 77,000 square feet at 777 Dunsmuir Street to equivalent space on four floors at 745 Thurlow Street. KPMG, which already leases space at 777 Dunsmuir Street, plans to absorb most of the space that McCarthy Tetrault vacates.
The most recent new downtown office development was the second phase of Bentall Five, which was completed in late 2007.
The last time a downtown Vancouver office tower was built from scratch was when the first phase of Bentall Five was completed in 2002.
Despite the lack of newly built office space, the downtown office vacancy rate increased to 3.8% in 2012's first quarter.
That's up from 3.5% in 2011's last quarter, according to Colliers International statistics.
Colliers notes that 25 floors were available in downtown Class AAA, A and B buildings at the end of March. That compares with only 11 full floors in those buildings at the same time in 2011. •
