On Thursday, September 20, 2012, NAIOP Vancouver held its September Breakfast Meeting at The Fairmont Waterfront. The future of the office market in Vancouver was the topic of discussion.
The Panelists included:
- Maury Dubuque
Senior Vice President, Office Leasing, Colliers International
Manager, Sales Development, Tenant Advisory Services, Colliers International
- Steffan Smith
Director of Leasing, GWL Realty Advisors Ltd.
- Jon Stovell
President and CEO, Reliance Properties Ltd.
Jeff Morgan, BBA, CA Vice President, Portfolio Management, Adera Development Corp, was kind enough to moderate the event.
Key takeaways from the event:
- The new downtown office buildings coming on stream will have a modest impact on vacancy and leasing rates; vacancy rates could move to the 4 to 6 percent range, up from the current 3 percent, resulting in a more balanced market.
- Older buildings will be refurbished and repurposed, possibly LEED certified, and redesigned for the emerging workforce - more open concept, suitable for hotelling and mobile workers; more "we" space and less "me" space.
- There will always be a need for well designed work spaces which are transit-friendly in the suburbs. The younger demographic is much more comfortable with taking transit and is less wedded to cars.
- Office space, whether downtown or the suburbs, has a future. Humans need to hive in groups and rub shoulders with each other, even as telecommuting is increasing.
- LEED is a basic requirment now for tenants
- An office along the skytrain corridor is a basic requirement for many tenants, and is the only area where a market will grow (especially in the suburban market)
- Amenities help sell office space - a fitness centre is a given; other amenities such as green space and nearby grocery stores are needed
- Lease rates are expected to remain at today's values ad not expected to increase in the next two years
Your questions answered! Q & A
What's the future of strata office in Vancouver?
I personally think the strata office model makes sense for a stable, size wise, company (e.g. a consultant) that wants to build a balance sheet at today's low finance rates and probably reduce their monthly premises costs. The owners can have real estate to sell when they retire or rental income. But the model will be more difficult for growing or shrinking companies. Having said that, I know of some companies that purchased multiple strata office units and lease out the excess units. They can take these units for themselves when leases expire down the road. Reliance has confidence enough in the strata market that they are building 100,000 sq ft of strata.
Where is 'center ice' in Vancouver and is the new development and transit, for example shifting it?
Center ice for me is still Burrard and Dunsmuir and the surrounding one to three blocks in all directions.
Missed the presentation? No problem. You can view it on the event presentation page here.