Mid-Year 2019 Office Market Report Metro Vancouver, BC
metro Vancouver Vacancy hits record lows as tenants face limited vacancy & absorption trends availability and rising rates in constrained market Vacancy Rate 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 etro Vancouver’s growing success at Vancouver-Broadway all reporting vacancy at Mattracting large global technology firms less than 5% and forecasted to tighten further 2019 3.2% 377,4267.3% and co-working operators has underscored by year-end 2019. As regional vacancy has de- local supply issues that have resulted from the clined steadily since mid-year 2016, demand re- protracted development times that have be- mained robust and intensified thereby exerting 532,027 Mid 2019 4.3% come increasingly commonplace throughout growing pressure on the ability of the region to the region in recent years. The result has been deliver new supply. The response has triggered record-low vacancies, rapidly rising rental rates the largest development cycle in the history 2018 5.1% 1,802,623 and constraints on the growth of local, national of Metro Vancouver, which will start delivering and international tenants, which could threaten new buildings primarily in the Downtown and Vancouver-Broadway markets starting in 2020 2017 8% 1,223,656 the success the region has had as an emerging through 2023. However, the lag until these global destination for companies seeking to es- buildings are completed has led to severely tablish new operations or expand existing ones. constrained market conditions that will persist 2016 856,868 9.7% Record-low office vacancy in Downtown Van- until 2021and likely into the first half of 2022. couver may be capturing national headlines, Positive first-half net absorption of 532,027 sf but it is a challenge facing all of Metro Vancou- 2015 10% 1,334,604 marked the fifth year in a row that the region ver as strong demand and limited new supply recorded positive absorption in the first six 400, 0 40 80 1, 1, 2,000,000 across the region led vacancy to slide to a new 0, 0, 20 60 months of the year. While less than the 764,911 000 000 0, 0, 00 000 000 0 record low of 4.3% at mid-year 2019. The pre- sf absorbed regionally in the first half of 2018, vious record low of 4.7% had been set at year- Absorption Rate (sf) the amount of first-half 2019 absorption was end 2007. Only one office market of the eight still notable considering that there was very lit- Vacancy Absorption that Avison Young covers in Metro Vancouver tle new construction added to the regional of- 12-month projection based on 10-year average absorption is considered balanced – Richmond – with the fice inventory in 2019. Much of the absorption and known net absorption in new inventory key urban markets of Downtown, Yaletown and was the result of tenants occupying existing continued on back page
METRO VANCOUVER OFFICE VACANCY SUMMARY (MID-YEAR 2019) INVENTORY HEAD LEASE SUBLEASE TOTAL VACANCY 6-MONTH DISTRICT (SF) VACANCY (SF) VACANCY (SF) VACANCY (SF) RATE (%) ABSORPTION (SF) Downtown 22,868,145 382,557 82,770 465,327 2% 202,168 Yaletown 2,074,372 7,601 1,668 9,269 0.4% 27,758 Vancouver-Broadway 7,330,164 316,967 25,096 342,063 4.7% 134,046 Burnaby 9,318,790 422,886 111,195 534,081 5.7% 179,136 Richmond 4,215,800 308,645 51,473 360,118 8.5% -46,648 Surrey 2,906,607 206,243 0 206,243 7.1% -8,865 New Westminster 1,688,572 212,600 0 212,600 12.6% 7,598 North Shore 1,450,898 106,921 5,110 112,031 7.7% 36,834 TOTAL 51,853,348 1,964,420 277,312 2,241,732 4.3% 532,027
Vacancy rate june 30, 2019 4.3% Absorption (demand) Vacancy (supply) Rental Rates vacancy rate December 31, 2018 5.1%
Partnership. Performance. avisonyoung.com Downtown Downtown vacancy hits new record low
Vacancy trends Spaces lease at 939 Granville Street. The such as the former Deloitte space in Downtown market is approaching (if not Bentall Centre available in the second Downtown office vacancy hit a new already at) structural vacancy (+/- 2%), half of 2019, appear unconcerned. The record low of 2% at mid-year 2019, particularly in class AAA and A buildings. Downtown market is heavily tilted in surpassing the previous record low of Despite intensifying supply constraints, favour of landlords and will remain 2.5% set in 2008. Vacancy decreased reasonable deal velocity was achieved in so until new (and available) inventory during the first six months of 2019 to 2% MORE THAN the first half of 2019. While co-working begins to arrive in 2021. Expect supply from 2.9%, and dropped an astonishing operators continue to make sizable constraints to precipitate further 300 basis points in the past 12 months 5 MSF forward commitments in the Downtown preleasing activity and lease extensions to 2% from 5%. Vacancy decreased in all office market, they are having to compete well in advance of contractual lease building classes, particularly class AAA, OF NEW with other tenants as intensifying supply expiries. which dropped dramatically to 0.7% DeVELOPMENT constraints stoke preleasing activity. Many from 2.6% in the past six months and sizeable companies are being forced absorption trends even more precipitously from 6.9% a year to consider their 2022 and 2023 lease For the fifth year in a row, positive earlier. Class A vacancy at mid-year 2019 expiries now. Larger tenants will need first-half absorption was recorded remained virtually unchanged since year- to demonstrate a willingness to address in the Downtown market. However, end 2018, but was down substantially space needs well in advance of lease first-half absorption of 202,168 sf at from the 4.6% recorded 12 months expiries as developers work to secure mid-year 2019 was substantially less ago. Class C vacancy decreased to 4.5% prelease commitments. There has been than the 471,532 sf of absorption from 6.3%, which was almost entirely virtually no “in-fill” leasing activity – one recorded in the first six months of attributable to commencement of the floor or less – in new developments, 2018. Almost half (48%) of Downtown which suggests developers remain first-half 2019 absorption occurred recent lease deals - mid-year 2019 (>10,000 sf) focused on multi-floor tenant prospects. in class AAA buildings with another Additional leasing activity may be 28% registered in class C buildings. tenant BUILDING SF stimulated when developers begin to Substantial downtown occupancies in WeWork B6 170,000 entertain interest from smaller tenants. the first half of 2019 included Spaces Undisclosed tenant Creative Space 75,780 Sublease space is not a significant part of at 939 Granville Street, Amazon Undisclosed tenant 155 Water Street 75,000 the Downtown market (approximately at The Exchange, Methanex Zayo Canada (renewal) 175 West Cordova Street 67,500 18% of overall vacancy) and almost occupying sublease space at the entirely comprises smaller-format spaces. Marine Building, Teck Resources’ PHSA (renewal) 1190 Hornby Street 63,500 Landlords appear to be inclined to take expansion at B5 and Bennett WeWork 1045 Howe Street 56,000 control of sublease availabilities through Jones LLP occupying space at Park BMO Financial Group (renewal) HSBC Building 48,300 rights of termination to take advantage Place. There were no noteworthy BentallGreenOak B6 47,000 of prevailing market fundamentals and downsizings or departures. secure more favourable lease terms on Clark Wilson LLP (renewal) HSBC Building 46,600 space availability factor Harper Grey LLP (renewal & expansion) Scotia Tower 46,300 a longer-term basis. At June 30, there Toronto-Dominion Bank (renewal) 700 West Georgia Street 43,000 were no vacant and available large blocks The space availability factor, or SAF, of contiguous space (with the possible refers to head lease space or sublease Unbounce Marketing Solutions (renewal) 401 West Georgia Street 39,200 exception of space in co-working facilities) space that is being marketed but is not B2Gold Corp. Vancouver Centre II 37,000 in the Downtown market. Landlords physically vacant, and new supply that Slack Technologies Bentall 5 34,140 with near-term large-block vacancies, is near completion and available for IQ Office Suites (renewal & expansion) Royal Centre 28,800 Vacancy with Space Availability Factor (SAF) and Absorption Canada Drives 1500 West Georgia Street 22,740 Zenabis Global (sublease) Park Place 16,370 14.0 1,101,041 1,200,000
Northeastern University Deloitte Summit Building 15,000 12.0 879,147 1,000,000 Hub International Bentall 1 15,000 2.8% 3.8% 800,000 1Qbit (sublease) 1285 West Pender Street 14,930 10.0 9.3% 2.2% 600,000
PHSA (renewal & expansion) 1033 Davie Street 14,870 F e
A 8.0 S
a t / R
IQ Office Suites 550 Robson Street 13,000 350,156 400,000
e 387,909 7.1% n o i a t 6.0 7.2% t R
Canwel Building Materials 1100 Melville Street 12,490 p
y 202,168 200,000 r c 200,811 o Jones Lang Lasalle Telus Garden 12,410 2.1% s a n 4.0 b 2.0% 0 A Trulioo 1177 West Hastings Street 11,600 V a c 2.8% 2.0 2.9% Sandstorm Gold (renewal) 400 Burrard Street 11,500 2.0% 200,000 0.4% Domus Legis Holdings 1125 Howe Street 10,700 0.0 400,000 Woodfibre LNG 1185 West Georgia Street 10,540 2015 2016 2017 2018 Mid 2019 2019 IMA Solutions (renewal) 1199 West Hastings Street 10,370 Vacancy Absorption SAF* Space Availability Factor EC Market 1140 West Pender Street 10,650 12-month projection based on 5-year average absorption and known net absorption in new inventory, Login Radius 815 West Hastings Street 10,930 and 10-year average SAF.
2 Partnership. Performance Existing space being absorbed due to lack of new available supply Downtown lease. SAF remained unchanged at mid- construction costs and developer desire to dented lease rates are the new normal for year 2019 from the 2% recorded secure prelease commitments will narrow the foreseeable future. Tenants new to the 12 months earlier. Combined with the delta between NERs for new construc- market with immediate space require- vacant space, the amount of space being tion and existing higher-calibre buildings ments or expansion needs will need to be marketed for lease in the Downtown in the near term. With the majority of new creative, assertive and prepared to make core is 4% (or approximately 914,000 developments less than 50% preleased, quick decisions. While the Downtown sf) – the lowest overall availability rate developers remain motivated to secure leasing environment will remain very chal- since mid-year 2008 (3.9% or 765,840 sf). Vacancy meaningful prelease commitments prior at lenging for both tenants and landlords, new construction to project completion. Market structural tenants will face the greater difficulties in vacancy, intense supply constraints, multi- the near term. However, a desire to secure There is more than 5 msf of new office ple offers for higher-calibre available space record preleasing commitments will keep devel- space for lease (either under construc- (particularly larger blocks) and unprece- low of 2% opers engaged with tenants. tion or in the development permit process) proposed for Downtown DEVELOPER BUILDING SF PRELEASE SF PRELEASE % COMPLETION Vancouver by 2024, which represents Reliance Properties/ The Offices at Burrard Place, the largest office development cycle in Jim Pattison Developments 1281 Hornby Street (mixed use) 99,000 (office podium) Strata 100% sold Q3 2019 the city’s history. Of that space, almost Creative Space @ Vancouver House, one-third was preleased at mid-year Westbank 1461 & 1462 Granville Street (two buildings) 75,780 75,780 100% Q4 2019 2019. With less than 175,000 sf of new Bosa Properties/ 1575 West Georgia Street 45,346 (office) Strata 72% sold Q1 2020 construction being delivered Downtown Arpeg Holdings in the back half of 2019 (all of which is Oxford Properties 402 Dunsmuir Street 147,000 147,000 100% Q1 2020 presold/preleased) and the majority of Rendition Developments Bench, 353 Railway Street (I-4 zoning) 26,772 Strata 0% sold Q1 2020 new space scheduled for 2020 already Reliance Properties/ The Offices at Burrard Place, preleased (with the notable exception of Jim Pattison Developments 1290 Burrard Street (mixed use) 133,000 (office tower) 0 0% Q3 2020 the 133,000-sf The Offices at Burrard Low Tide Properties 155 Water Street 75,000 (office) 75,000 100% Q3 2020 Place), most tenants seeking new Westbank/Allied REIT Deloitte Summit Building, 353,000 295,950 84% Q4 2020 large-block space will have to wait until 410 West Georgia Street 2021 for Bosa Waterfront Centre, 601 Bosa Developments Bosa Waterfront Centre, 320 Granville Street 374,790 (45% for lease) Lease/Strata* 55% sold Q2 2021 West Hastings, 968-980 Granville Street PCI Group / Greystone 601 West Hastings Street 210,000 0 0% Q3 2021 and Vancouver Centre II to deliver. Niels Bendtsen 411 Railway Street (I-4 zoning) 111,930 15,000 13% Q3 2021 While the building deliveries in 2021 GWL Realty Advisors Vancouver Centre II, 733 Seymour Street 377,000 142,000 38% Q4 2021 (which have enjoyed moderate levels of Bonnis Properties 968-980 Granville Street 50,000 0 0% Q4 2021 preleasing to date) may provide limited Bonnis Properties 600 Robson Street 61,670 Strata 0% sold Q2 2022 relief to the historically tight market, the Oxford Properties The Stack, 1133 Melville Street 532,000 (office) 207,000 39% Q2 2022 arrival of new supply in 2022, including QuadReal Property Group The Post , 349 West Georgia Street (mixed-use) South tower: 510,000 426,000 38% Q3 2022/ The Stack, is what will likely provide the North tower: 560,000 (south tower) Q2 2023 necessary space to meaningfully impact FDG Properties 117-131 Water Street 68,576 (office) 0 0% Q3 2022 vacancy. However, it may take the new PCI Group 1025 West Georgia Street (redevelopment) 76,000 (office) 0 0% Q3 2022 deliveries in 2023, including the north Asia Standard Americas 1438 Robson Street 29,115 (office) 0 0% Q4 2022 tower of The Post, B6 and 1166 West Uptown Property Group 625 West Hastings Street 120,000 0 0% Q1 2023 Pender, to achieve a more balanced mar- BentallGreenOak B6, 1090 West Pender Street 534,000 217,000 41% Q2 2023 ket, an environment not seen since 2015. Reliance Properties Two Burrard Place, 40,252 (office) Strata 0% sold Q2 2023 market forecast 1261 Hornby Street (Tower C)) Reliance Properties 1166 West Pender Street 363,000 (office) 0 0% Q4 2023 Expect continuing upward pressure on Westbank 720 Beatty Street 580,000 (office) 0 0% Q1 2024 net effective rental rates (NER) in existing Omicron / Rendition Maker Exchange, Awaiting prelease buildings as near-term supply constraints Developments 488 Railway Street (I-4 zoning) 152,000 - - commitment intensify due to a combination of increas- Aquilini Development and Aquilini Centre East, ing net rental rates and/or diminishing Construction 777 Pat Quinn Way TBD - - Proposed leasing inducements. Supply constraints, Cadillac Fairview Waterfront Tower, 555 West Cordova Street TBD - - Proposed escalating leasehold improvement *The building contains 45% lease space and 55% strata space. The strata space is 100% sold. No preleasing had been completed by mid-year 2019.
HEAD LEASE SUBLEASE TOTAL TOTAL 6-MONTH NET RENTAL RATE GROSS OCCUPANCY CLASS INVENTORY SAF (SF) SAF (%) VACANCY (SF) VACANCY (SF) VACANCY (SF) VACANCY (%) ABSORPTION (SF) RANGE (PSF) COST (PSF) AAA 4,980,576 24,495 8,633 33,128 0.7% 97,353 195,583 3.9% $35 - $70 $55 - $95 A 8,103,253 95,003 45,854 140,857 1.7% 15,474 91,296 1.1% $29 - $58 $48 - $83 B 6,639,398 131,456 18,979 150,435 2.3% 32,218 136,438 2.1% $27 - $43 $42 - $65 C 3,144,918 131,603 9,304 140,907 4.5% 57,123 25,952 0.8% $23 - $32 $34 - $50 Total 22,868,145 382,557 82,770 465,327 2% 202,168 449,269 2% - - avisonyoung.com 3 downtown development timeline
The offices at Burrard Place Creative Space, 1575 West Georgia Street 402 Dunsmuir Street 155 Water Street AN ICONIC1281 Hornby Street 1461 & 1462 Granville Street
OffICe The Offices aT Burrard Place are a funcTiOnal sculPTure and The cOrnersTOne Of TOWeR a full ciTy BlOck Of new develOPmenT.
One of the last buildings designed by Vancouver’s world-renowned architect, Bing Thom, this structure will define the southern entrance to downtown Vancouver and will anchor the largest mixed-use development in the most rapidly growing commercial / residential community on the downtown peninsula.
Connected to the sixty-storey luxury residential tower, The Offices at Burrard Place will animate one of the most prominent corners of one of Vancouver’s most notable streets. Complementing the curving glass of the exterior, the office interiors will be among the finest in the city. And in addition, an incredible array of world class amenities will provide commercial occupants with a workplace lifestyle unmatched in Vancouver.
The Offices at Burrard Place represent a new standard for business that will attract and retain the best talent and employers in Vancouver.
Q3 2019 Q4 2019 Q1 2020 Q1 2020 Q3 2020
Reliance Properties/ Developer Westbank Bosa Properties/Arpeg Holdings Oxford Properties Low Tide Properties Jim Pattison Developments Storeys 7-storey podium (3 floors) 5 3 floors in mixed-use building 9 7 office sf 99,000 (strata) 75,780 45,346 147,000 75,000
75,780 sf - 32,649 sf - Arpeg Holdings & 75,000 sf - tenants Sold (phases 1 & 2 - 99,000 sf) 147,000 sf - Amazon Undisclosed tenant co-working operator Undisclosed tenant
Occupancy 100% sold 100% 72% sold 100% 100%
The Stack, The post, B6, 625 West Hastings Street 1166 WEst pender street 1133 Melville Street 349 West Georgia Street 1090 WEst Pender Street
Q2 2022 Q3 2022/Q2 2023 Q1 2023 Q2 2023 Q4 2023
Developer Oxford Properties QuadReal Property Group Uptown Property Group BentallGreenOak Reliance Properties Storeys 36 17 (south tower) / 18 (north tower) 28 32 31 office sf 532,000 1,130,000 120,000 534,000 363,000 80,000 sf - Blake, Cassels & Graydon 170,000 sf - WeWork tenants 67,000 sf - DLA Piper 426,000 sf - Amazon No tenants at this time. No tenants at this time 47,000- BentallGreenOak 60,000 sf - EY Canada Occupancy 39% 38% 0% 41% 0%
4 Partnership. Performance The Offices at Burrard Deloitte Summit Building, Bosa Waterfront Centre, Vancouver Centre II, 601 WEst hastings street Place, 1290 Burrard Street 410 West Georgia Street 320 Granville Street 733 Seymour Street
Q3 2020 Q4 2020 Q2 2021 Q3 2021 Q4 2021
Reliance Properties / Developer Westbank/Allied REIT Bosa Developments PCI Group/Greystone GWL Realty Advisors Jim Pattison Developments Storeys 13 24 30 25 33 office sf 133,000 353,000 374,790 210,000 377,000 119,320 sf - Spaces Approx. 55% of the building has 105,000 sf - Kabam Inc. tenants No tenants at this time 117,000 sf - Deloitte Canada been sold as strata office space; No tenants at this time 44,630 sf - Apple 37,000 sf - B2Gold 15,000 sf - Northeastern University no prelease commitments currently Occupancy 0% 84% 0% 0% 38% proposed downtown developments 968-980 Granville Street Two Burrard place, 600 Robson Street Royal Centre, 720 Beatty Street Developed by 1261 Hornby Street Developed by 1025-1055 West Georgia Developed by Bonnis Properties Developed by Bonnis Properties Developed by Westbank floors / Office area reliance properties Storeys / Office area PCI Group floors / Office area 3 / 50,000 sf floors / Office Area 13 / 61,670 sf storeys / Office area 17 / 580,000 sf 3 / 40,252 sf 5 / 76,000 sf
This redevelopment of the The development permit The development per- A development permit An updated rezoning existing one-storey retail application for this project mit application was filed application was filed July 2, application was refiled with buildings will involve a new was approved with prior-to February 1, 2019 and called 2019 and is scheduled to the City in December 2018 four-storey building with conditions in fall 2018; the for a 13-storey building with go before the development and the UDP supported 50,000 sf of office space on application calls for three 61,670 sf of office space permit board on Septem- the building design in floors two to four with retail floors of strata office space as well as limited retail at ber 3, 2019. The existing April 2019. The proposed units at grade. The develop- in the podium of a 35-storey grade. The development bank building at 1025 West 580,000-sf building would ment permit is expected to mixed-use development, permit board reviewed the Georgia will be replaced by include 17 floors of office be issued in the summer of which also includes retail application on April 29, a five-storey commercial space for lease as well as 2019 with construction set space as well as market 2019. The application was building with four floors of minimal retail at grade. to start by the end of the rental and strata dwelling subsequently approved office space totalling 76,000 Construction would com- year. Construction of the units; the building (tower subject to conditions out- sf above retail space at mence in 2020 with com- building is scheduled for C) will be part of the larger lined in the staff report. The grade. The application also pletion estimated for early completion by the end of Burrard Place development office component will likely seeks to make alterations 2024. The building would 2021. No prelease commit- and will start construction be offered for sale as strata and additions to the existing be one of the largest office ments were confirmed by in the first half of 2020 with space. lobby of 1055 West Georgia buildings in terms of square mid-year 2019. completion scheduled for as well as alterations to the footage in Vancouver if mid-2023. existing retail mall. constructed as proposed. avisonyoung.com 5 Vancouver-Broadway Vacancy sinks to lowest point since 2015
Vacancy and Absorption (overall) market forecast
12.0 450,000 The upward pressure on rental rates that 425,059 manifested in the first half of 2019 will 400,000 remain through the year as vacancy con- 10.7% 400,511 10.0 350,000 tinues to tighten. Options in the 7.3-msf 300,000 Vancouver-Broadway market remained 8.0 very limited with only two options larger 250,000 vacancy
e than 10,000 sf available at mid-year 2019. e likely to
a t a t
200,000 R
R
Landlords continue to hold the upper n y
6.0 o c i achieve 134,046 t hand in lease negotiations with tenants p a n 150,000
5.9% r
o record-low s V a c having limited options. Vacancy is likely
85,234 b 4.9% 4.7% 100,000 A 4.0 4.5% rates to hit historic lows in 2019, but unlike 15,187 50,000 in 2019 most other markets in Metro Vancouver, new supply in 2020 will likely provide 2.0 - 2.6% 0 some relief. While much of the new 50,000 -38,637 supply in 2020 and 2021 is preleased/ 0.0 100,000 presold, several new lease and strata 2015 2016 2017 2018 Mid 2019 2019 options remain available. However, large- Vacancy Absorption block availabilities will remain scarce in 12-month projection based on 10-year average absorption and known net absorption in new inventory the near- to mid-term as most of the Vacancy trends market (since 2012) and the third most new projects being delivered in 2019 positive absorption registered in the and 2020 are less than 65,000 sf. Larger Overall vacancy sunk to 4.7% at mid-year region after Downtown and Burnaby. office developments (those exceeding 2019, a rapid decline from 10% a year Absorption will remain positive in 2019 140,000 sf) such as 339 East 1st Avenue, earlier, but little changed from the 4.9% with Relic Entertainment occupying 425 West 6th Avenue, Main Alley (M4) recorded at year-end 2018. The rapid the Nickel building in Mount Pleasant, and the Onyx will not offer meaningful decline year-over-year was the result CarboNet Nanotechnologies, vacancy relief until 2021. Leasing and of a number of new buildings that had local and Trees Organic moving development activity that falls within been delivered vacant in the first half of in to The George and Anandia the Broadway corridor planning zone 2018 being subsequently occupied in Labs expanding in 887 Great has also been impacted by the City the back half of the year. Vacancy in the Northern Way by the end of the year. of Vancouver’s moratorium on new core Vancouver-Broadway submarket rezoning applications in the area while slipped to 6.5% at mid-year 2019 from new construction it finishes its Broadway area plan. This is 8.2% 12 months previous, but was up The majority of new construction in making it challenging for both landlords from the 3.1% vacancy rate recorded at the Vancouver-Broadway market is and tenants to commit to deals due to year-end 2018. This increase in vacancy located in three nodes: Mount Pleasant, the heightened uncertainty surrounding in the core was largely the result of the emerging City Hall District and what the city’s ultimate direction on Industrial Alliance relocating to 988 the False Creek Flats. Most new office what will and will not be permitted. West Broadway and vacating 61,000 sf in development in these nodes includes its former head office at 2145 and 2165 light industrial flex space as required West Broadway. Vacancy in the peripheral NOTABLE LEASE DEALS - mid-YEAR 2019 by zoning regulations. Developments Vancouver-Broadway submarket plunged in Mount Pleasant including The to 2.2% at mid-year 2019 from 12.3% a Beltline off Broadway, The Yukon, tenant BUILDING SF year earlier and was lower than the 7.4% The Workshop, 2131 Manitoba Street, LaSalle College (renewal) 2665 Renfrew Street 81,600 vacancy recorded at year-end 2018. RBC Main Alley and HOUSS all include a Vancouver Police Department (renewal) 2120 Cambie Street 74,000 Wealth Management and the City of combination of office and light industrial Vancouver Coastal Health Authority Vancouver occupying almost 65,000 sf 520 West 6th Avenue 60,000 flex space. New strata offerings are also (renewal) at Marine Gateway in south Vancouver increasingly common but, with the Klohn Crippen Berger Broadway Tech Centre, helped push vacancy in the periphery to 50,000 exception of 1308 Adanac Street and (renewal & expansion) 2955 Virtual Way its lowest point since Avison Young started The George, have been only available AbCellera Biologics Inc. 2131 Manitoba Street 48,030 breaking out Vancouver-Broadway’s core in Mount Pleasant. Developments in and periphery markets in 2016. Deal City of Vancouver 510 West Broadway 41,260 the City Hall district, including 510 West velocity was sluggish in the first half of Anandia Laboratories Inc. Broadway, CityLink and 2395 Cambie (renewal & expansion) 887 Great Northern Way 26,000 2019 due to a lack of lease opportunities. Street, along with 425 West 6th Avenue Revery Architecture 1706 West 1st Avenue 12,100 absorption trends on the western edge of Mount Pleasant Pavilion Cowork (sublease) 22 East 5th Avenue 11,680 are all primarily office use. Projects Yana Health System 369 Terminal Avenue 11,120 Positive absorption of 134,046 sf in the located on or near the False Creek Flats Tech Mahindra Ltd. (sublease) 2985 Virtual Way 10,590 first half of 2019 marked the seventh including 339 East 1st Avenue, 2102 Zymeworks (expansion) Main Alley (M2) 10,300 consecutive year of positive first-half Keith Drive and The Onyx tend to be Royal Pacific Realty 1200 West 73rd Avenue 10,300 absorption in the Vancouver-Broadway more traditional office uses as well. Gossamer Threads 2233 Columbia Street 7,270 6 Partnership. Performance Absorption strong as tenants occupy new construction Vancouver-broadway
Mount Pleasant DEVELOPER BUILDING SF PRELEASE % COMPLETION Employment Area Rendition Developments The Beltline Off Broadway, 240-260 West 8th Avenue 32,898 (office/light industrial) Strata: 69% sold Q1 2020 Pacific Crown Management Ltd. 510 West Broadway 41,262 (office) 100% Q3 2020 (I-1, I-1A Zoning) Chard Development The Yukon, 2238 Yukon Street 54,492 (office/light industrial) Strata: 31% sold Q4 2020 Office vacancy remained tight in Vanlux Development CityLink, 525 West 8th Avenue 62,657 (office) 0% Q4 2020 Mount Pleasant, slipping to 3% in the Mondivan The Workshop, 161 East 4th Avenue 55,011 (office/light industrial) 10% Q4 2020 nearly 1-msf office node, at mid-year Wesgroup Properties 2131 Manitoba Street 48,030 (office/light industrial) 100% Q1 2021 2019. While WeWork occupied 43,180 sf at 2015 Main Street, which signifi- Westbank / Hootsuite Main Alley (M2), 114 East 4th Avenue 170,543 (office/light industrial) 39% Q1 2021 cantly reduced vacancy, smaller spaces Conwest Group HOUSS, 37 West 6th Avenue 47,165 (office/light industrial) Strata: 0% Q2 2021 and strata options do remain available. Triovest 339 East 1st Avenue 144,000 0% Q2 2021 The majority of new supply is sched- Union Allied Capital Corp. 1308 Adanac Street 55,160 (office/light industrial) Strata: 0% Q3 2021 uled to start delivering in 2020 and Cressey Development 425 West 6th Avenue 163,000 (office) 19% Q3 2021 2021. Deal velocity had been slow in Rize Alliance The Onyx, 1296 Station Street 271,500 (office) 0% Q4 2021 the first half of 2019, but demand high. Westbank / Hootsuite Main Alley (M4), 110 East 5th Avenue 167,013 (office/light industrial) 0% Q4 2021 With just two lease transactions of BentallGreenOak 2102 Keith Drive 168,000 ~33% Q2 2022 note in Mount Pleasant in the first half CRS Group of Companies 2395 Cambie Street 39,720 (office) 0% Q4 2022 of 2019, the lack of leasing activity has 660 & 668 West 41st Avenue Westbank / QuadReal Property Group 175,440 (office/medical) Strata: 69% sold Q1 2023 been attributed to a lack of available (phase one of Oakridge Centre redevelopment) space with most project completions Onni Group 375 East 1st Avenue 129,207 (office/high-tech industrial) 0% Q2 2023 at least 12 months or more away. QuadReal Property Group Broadway Tech Centre, 3030 East Broadway (five buildings) 962,300 0% Awaiting prelease Leasing activity is forecasted to rise QuadReal Property Group / Hungerford Properties 220 East 1st Avenue 121,445 (office/light industrial) 0% Proposed in the back half of the year as project lululemon athletica 1980 Foley Avenue 511,448 (office) 0% Proposed completion dates near and tenants start making decisions. Polygon Homes 5740 Cambie Street 66,800 (office) 0% Proposed Vivagrand Developments 5812-5844 Cambie Street 100,000 (office) 0% Proposed Upward pressure on rental rates Rendition Developments 205 West 5th Avenue 24,585 (office/light industrial) Strata: 0% Proposed remains with slight increases expected Strand Development 302,328 & 336 West 2nd Avenue 56,317 (office/light industrial) Lease or Sale Proposed in the new buildings through 2019 as vacancy remains tight and availability TG Group of Companies Focal on 3rd, 107 East 3rd Avenue 22,659 (office/light industrial) Lease/Strata: 0% Proposed limited. Lease rates in existing build- ings have a much wider range – low $20s to high $30s - based on the age new New SF by 2022 Currently and quality of the building. The lack projects preleased 24% of recent leasing activity in Mount by 2022 15 1,516,420 Pleasant has slowed the rate of rent increases, but with leasing activity HEAD LEASE SUBLEASE TOTAL TOTAL 6 -MONTH AVERAGE NET GROSS OCCUPANCY expected to pick up by year-end 2019, CLASS INVENTORY rates will likely rise accordingly. Lease VACANCY (SF) VACANCY (SF) VACANCY (SF) VACANCY (%) ABSORPTION (SF) RENTAL RATE (PSF) COST (PSF) space remains limited even in the A 2,233,551 74,117 2,685 76,802 3.4% 6,601 $25 - $35 $42 - $55 new buildings being constructed or in
CORE B 1,453,745 122,602 8,581 131,183 9.0% -61,111 $18 - $25 $31 - $41 those proposed. Strata options such as HOUSS provide an alternative to C 538,132 56,786 7,830 64,616 12.0% 6,051 $15 - $19 $28 - $33 leasing space as vacancy is anticipated Total 4,225,428 253,505 19,096 272,601 6.5% -48,459 - - to remain tight, options limited and HEAD LEASE SUBLEASE TOTAL TOTAL 6 -MONTH AVERAGE NET GROSS OCCUPANCY rental rate increases likely to accelerate CLASS INVENTORY VACANCY (SF) VACANCY (SF) VACANCY (SF) VACANCY (%) ABSORPTION (SF) RENTAL RATE (PSF) COST (PSF) in 2020 as lease deals start being com- pleted in the new supply. While the A 2,360,726 35,580 6,000 41,580 1.8% 171,303 $22 - $35 $40 - $55 disposition of strata production space B 657,159 12,061 0 12,061 1.8% 9,308 $18 - $23 $31 - $38 remains somewhat challenged, strata PERIPHERY C 86,851 15,821 0 15,821 18.2% 1,894 $15 - $19 $28 - $33 take up has otherwise been strong. Total 3,104,736 63,462 6,000 69,462 2.2% 182,505 - -
HEAD LEASE SUBLEASE TOTAL TOTAL 6-MONTH AVERAGE NET RENTAL GROSS OCCUPANCY CLASS INVENTORY VACANCY (SF) VACANCY (SF) VACANCY (SF) VACANCY (%) ABSORPTION (SF) RATE (PSF) COST (PSF) A 4,594,277 109,697 8,685 118,382 2.9% 164,008 $22 - $35 $39 - $55 B 2,110,904 134,663 8,581 143,244 6.8% -51,803 $18 - $23 $31 - $38 OVERALL C 624,983 72,607 7,830 80,437 12.9% 7,945 $15 - $19 $28 - $33 Total 7,330,164 316,967 25,096 342,063 4.7% 134,046 - - avisonyoung.com 7 Yaletown Vacancy hits historic record low at mid-year 2019
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