Metro Vancouver Office
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CBRE Limited MarketView Metro Vancouver Office Notable Lease Transactions Global Research and Consulting Metro Vancouver Office Size (SF) Tenant Address www.cbre.ca/research Fourth Quarter 2011 Average Asking Lease Rate Rate determined by multiplying the asking net Continuing on a trend of decreasing vacancy and Construction has already begun on the lot beside 103,033 Sierra Wireless 13811/13911 Wireless Way, Richmond lease rate for each building by its available positive absorption from earlier in the year, the the Marine Building at West Hastings and Burrard space, summing the products, then dividing by Metro Vancouver office market posted strong Street, where Oxford’s 1021 West Hastings project the sum of the available space with net leases 100,000 SNC-Lavalin 745 Thurlow Street, Vancouver market fundamentals over the fourth quarter of is being built on a speculative basis and whose for all buildings in the summary. 2011. As was forecast last quarter, market 8,000 SF floorplates are expected to attract Net Leases conditions continued to steadily improve, helping Vancouver’s diverse tenant base with typically 62,330 TD Bank Group 700 West Georgia Street, Vancouver Includes all lease types whereby the tenant pays both core and peripheral markets witness positive smaller occupancy requirements. an agreed rent plus most, or all, of the operating gains. TELUS/Westbank’s multi-phased and mixed-use expenses and taxes for the property, including Quick Stats TELUS Garden development is also expected to 54,390 Bell Canada 2980 Virtual Way, Vancouver utilities, insurance and/or maintenance After reaching peak vacancy at mid-year 2010, begin construction downtown in 2012, while expenses. the Metro Vancouver office market continued to rezoning applications have been submitted for Change from last witness quarter-over-quarter decreases, with the both Manulife’s large floorplate 980 Howe Street 20,256 Navigata Communications 3555 Gilmore Street, Burnaby Market Coverage Current Yr Qtr. Includes all competitive office buildings 10,000 fourth quarter of 2011 continuing the trend. The office project and Credit Suisse/Swissreal’s regional vacancy rate improved to 8.0%, heritage-inspired The Exchange office tower. In the square feet and greater in size. Vacancy 8.0% 18,000 Clevest Solutions Inc. 13911 Wireless Way, Richmond backstopped by several large tenancies within the peripheral markets, construction activity is Net Absorption Downtown, Burnaby, and Richmond markets. expected to resume at Ivanhoe Cambridge’s The change in occupied square feet from one Lease Rates $19.95 psf Leasing activity was relatively balanced across all Metrotower III development, which was on hold period to the next. Net Absorption 294,085 SF submarkets this quarter, a phenomenon that was since the recession but will now be offered on a Metro Vancouver Submarket Map Net Rentable Area somewhat different in previous quarters where the speculative basis. Onni’s Central Development The gross building square footage minus the New Supply** 0 SF downtown core often received the majority of along with Rize Alliance’s Containers (Phase I) elevator core, flues, pipe shafts, vertical ducts, leasing activity. The downtown vacancy rate project have begun construction while Panorama balconies, and stairwell areas. dropped for the seventh consecutive quarter to Place and Grandview Business Centre in Surrey *The arrows are trend indicators over the 3.4% led primarily by gains within the Class A and were recently completed and came to the market Occupied Square Feet specified time period and do not represent a positive or negative value. (e.g., absorption B markets, while vacancy declined in the Burnaby, with strong strata pre-sales activity. Building area not considered vacant. could be negative, but still represent a Richmond and New Westminster submarkets to positive trend over a specified period.) 12.9%, 21.4% and 11.9%, respectively. Looking ahead, market activity is expected to be Under Construction **Denotes Competitive Lease (Non-Strata) Buildings which have begun construction as Product Only. tepid over the next several months as global evidenced by site excavation or foundation work. Net absorption in the fourth quarter was strong, economic conditions are being observed with over 294,085 SF of positive absorption cautiously. As was forecast during the third quarter Available Square Feet Hot Topics overall. The downtown core once again led with of 2011, some tenants will be hesitant, but limited Available Building Area which is either physically • Metro Vancouver’s vacancy rate 161,914 SF of positive absorption alone. Total supply and relatively strong fundamentals will vacant or occupied. absorption for the year stands at 860,383 SF, a continue to support market activity. Downtown declined to 8.0% led by balanced Availability Rate marked improvement from 235,004 SF in 2010. tenants with lease expiries over the next 12-24 Available Square Feet divided by the Net growth across the region. months are expected to see upward movement in Rentable Area. Regional office development continues to be a pricing, while greater preference for renewals and • Vacancy in the downtown submarket major focus within the region, as decreasing early term restructuring is also likely. Accordingly, Vacant Square Feet declined to a near-record low of supplies of quality space on the market support landlords with long-term exposure will solidify their Existing Building Area which is physically vacant 3.4% this quarter. demand for new supply. With over 190,000 SF of portfolios over the next year as supply conditions or immediately available. pre-leasing in place between McCarthy Tetrault change. While pricing conditions will remain Vacancy Rate • Suburban vacancy declined to 12.9% and SNC-Lavalin, Bentall Kennedy’s 745 Thurlow favourable for suburban tenants in the short-term, Vacant Building Feet divided by the Net Rentable in the fourth quarter. development is anticipated to break ground in growing demand should start to narrow the gap Area. early 2012 with many expecting the building to be for landlords over the long-term. • Several highly anticipated office an attractive option for larger tenants. Market Area Descriptions Normalization development projects have broken Due to a reclassification of the market, the base, (1) DOWNTOWN VANCOUVER consists of 21.9 million SF (51.4%) of the office market inventory. number and square footage of buildings of ground in the region, including 1021 (2) THE BROADWAY CORRIDOR consists of 4.2 million SF (10.1%) of the office market inventory. previous quarters have been adjusted to match West Hastings, Central, Containers Metro Vancouver Historical Absorption Absorption Vacancy (3) BURNABY consists of 7.6 million SF (17.5%) of the office market inventory. the current base. Availability and Vacancy figures Phase I, Metrotower III and Merchant (4) RICHMOND consists of 3.6 million SF (8.7%) of the office market inventory. for those buildings have been adjusted in Square. 300,000 12% (5) NORTH SHORE consists of 1.8 million SF (4.3%) of the office market inventory. previous quarters. 250,000 10% (6) SURREY consists of 2.5 million SF (6.0%) of the office market inventory. SF 200,000 8% (7) NEW WESTMINSTER consists of 1.1 million SF (2.7%) of the office market inventory. 150,000 6% For more information regarding the 100,000 4% MarketView, please contact: 50,000 2% Anthio Yuen, Senior Research Analyst 0 0% CBRE Limited This disclaimer shall apply to CBRE Limited, Brokerage, and to all other divisions of the Corporation (“CBRE”). The information set out herein (the “Information”) has not 600 – 111 West Georgia Street, Vancouver, BC 4Q10 1Q11 2Q11 3Q11 4Q11 been verified by CBRE, and CBRE does not represent, warrant or guarantee the accuracy, correctness and completeness of the Information. CBRE does not accept or assume V6E 4M3 Canada any responsibility or liability, direct or consequential, for the Information or the recipient’s reliance upon the Information. The recipient of the Information should take such steps as the recipient may deem necessary to verify the Information prior to placing any reliance upon the Information. The Information may change and any property T. 604.662.3000 F. 604.684.9368 described in the Information may be withdrawn from the market at any time without notice or obligation to the recipient from CBRE. [email protected] © 2012 CBRE Limited MarketView MarketView Office Market Statistics Net Absorption Submarket Building Class Net Rentable Vacancy 4Q 2011 Net Completed Avg. Asking Lease The market recorded 294,285 SF of positive absorption over the Metro Metro VancouverOffice Metro Metro VancouverOffice 350 Area (SF) Rate (%) Absorption (SF) Construction (SF) Rate ($/SF/YR) quarter, bringing YTD totals to over 860,383 SF and much improved 300 Class AAA 4,349,203 1.4 -7,975 - $37.28 from 2010 levels. As well, the fourth quarter marked the seventh Class A 5,778,937 2.4 102,116 - $32.85 250 consecutive quarter of positive absorption, an indicator of strong Downtown Class B 7,679,528 3.4 51,092 - $26.14 200 market activity over the last two years. Limited new supply coupled Class C 4,123,211 6.8 16,681 - $19.01 with continued demand for office space in the region should result in Subtotal 21,930,879 3.4 161,914 - $25.51 150 SF (000s) SF strong absorption numbers over the next 12-24 months; however, the Class AAA 508,294 4.6 -695 - $24.23 100 Class A 1,245,175 5.2 -12,944 - $22.55 upcoming construction cycle will change things as new projects start to 50 Broadway Corridor Class B 1,645,853 5.6 4,871 - $21.38 be delivered in 2014. Class C 850,338 7.7 3,851 - $18.59 0 Subtotal 4,249,660 5.8 -4,917 - $21.22 4Q10 1Q11 2Q11 3Q11 4Q11 Class AAA 2,410,846 10.3 -2,636 - $22.90 Class A 2,824,763 10.8 71,699 - $19.12 Burnaby Class B 1,922,011 16.5 -9,035 - $15.57 Class C 442,474 24.0 -7,334 - $15.26 Subtotal 7,600,094 12.9 52,694 - $19.04 Vacancy Class AAA 1,501,980 16.8 63,352 - $19.00 The regional vacancy rate fell to 8.0% led by balanced growth across Class A 1,278,738 22.9 17,824 - $16.76 Suburban Urban the region.