Transit-oriented residential development is setting the pace for office space, as employers gravitate to locations that are convenient for workers to access.
“There’s a growing trend for tenants to consider the needs of their staff ... things like, is it convenient for my staff to get there?” said Jocelyne Legal, senior director of leasing, Triovest Realty Advisors (B.C.) Inc. “Anything that pertains to hiring and retaining, and having a comfort level for your staff, is going to be part of the decision. Transit is definitely a part of that.”
While studies of where employees live and reach their workplace have long been common, the rise of residential developments on or close to transit lines means that more people are using transit than ever before. The most recent figures from TransLink indicate that the region’s residents make 6.1 million trips on transit networks on a typical day.
Triovest, for example, has a popular shuttle service between Willingdon Business Park, located a few minutes’ walk from the Gilmore and Brentwood SkyTrain stations. Willingdon, which had a vacancy rate of 37% shortly after its final building completed in 2010, is now 13% vacant.
While the shuttle service has helped bridge the distance from SkyTrain, Legal makes the trek in about seven minutes – approximately the same time it takes her to walk from Triovest’s offices on West Pender to SkyTrain’s Granville Station. Highway 1 also runs by the park.
“I’m cautious about saying that unless you build on transit you’re going to experience higher vacancy rates. That’s a pretty broad statement to make,” she said. “[But] if you have product that’s really disconnected from transit services, and there’s nothing in the pipeline, I would have some concerns.”
Richmond’s Crestwood Corporate Centre in East Richmond south of Highway 91, for example, was described as a “ghost town” by some sources. One industry estimate put vacancies at more than 30% (manager GWL Realty Advisors Inc. declined comment).
This compares with total vacancies in Richmond office parks of 23%, which Colliers International reports is up from just 6% five years ago. Overall office vacancies, by contrast, have merely doubled over the same period, to 20.5% from 10%.
Meanwhile, in Burnaby, office park vacancies have risen to 22% from 12% five years ago, in step with the increase in overall office vacancies to 8.3% from 4.5%.
While vacancies have risen by half across Metro Vancouver in the past five years, the significant increases Colliers notes in areas such as Burnaby and Richmond are largely determined by accessibility and, in turn, transit.
“It’s about being central to employees and a little bit more accessible to employees, whether it’s transit, road, whatever,” explained Kirk Kuester, managing director for Colliers in Vancouver.
Burnaby, for example, is “much more centralized,” thanks to a central location within the Lower Mainland as a whole as well as the presence of Highway 1 and two SkyTrain lines.
“It’s a preferred geography,” he said. “Richmond has always been challenged by location and by accessibility.”
With stiff competition in the region’s office market, notwithstanding the willingness of some tenants to pay $50 a square foot and more for downtown office space, accessibility and transit are becoming deciding factors for some companies.
“Many of these larger employers that are really focused on a high-quality workforce are looking to locate closer to downtown or around urbanized suburban centres,” Kuester said.
“Transit’s obviously a big influencer because it’s in place and it continues to evolve.”
Neonila Lilova, economic development manager for Richmond, acknowledges the problem.
Commercial development is planned for a 358-acre corridor along the Canada Line, which opened in late 2009, but the plans highlight the problem facing outlying office developments in east and southeast Richmond.
Jones Lang LaSalle reports that Richmond has the least amount of A-class office space on rapid transit of any municipality in Metro Vancouver, at 6.5%. Vacancies run 1.8%, while comparable space off transit is 19.2% vacant.
“Those rates are driven by office parks not in proximity to transit corridors,” Neonila said. “We hear from our businesses that the major concern of not being located, say, on the Canada Line, is that employees cannot get there.” •
