March 2015 Office Development in Metro Vancouver’s Urban Centres Update to the February 2013 Report Office Development in Metro Vancouver’s Urban Centres Executive Summary ADVANCING METRO 2040 GOALS Actions to encourage office development in Urban Centres and areas well served by transit are key elements of Metro Vancouver’s regional growth strategy – Metro Vancouver 2040: Shaping Our Future (Metro 2040). Regional policy direction in Metro 2040 responds to the significant number of office projects historically developed outside of Urban Centre locations, such as in suburban office parks. These locations can have negative impacts on land use and transportation patterns for the region. Focusing office development in Urban Centres benefits the regional transportation system and livability in a number of ways: by supporting the development of complete communities, reducing vehicle commutes and employee transportation costs, protecting lands for other uses, complementing commercial and residential land uses, and increasing the vibrancy and success of Urban Centres. Planning policy and market forces are partially aligned. The market and office tenants increasingly appreciate locations that are well served by transit and urban amenities, while still in some cases highway access and suburban sites are desired. Although major office developments at SkyTrain station locations outside of REPORT UPDATE Urban Centres can increase transit ridership, development The report is an update and enhancement of an earlier in these locations can take away from the potential version released in February 2013. The associated growth and success of Urban Centres by not providing office building inventory database has been updated for the critical mass and mix of density and activity to to the end of 2014 and supplemented with additional support other complementary uses and associated urban information. The database also includes buildings with amenities in Urban Centres. office components that are 10,000 sq. ft. and larger (the previous database used a 20,000 sq. ft. threshold). The PURPOSE AND PROCESS analysis of the inventory (Chapter 2) includes reporting in terms of distribution of the inventory by location – sub- This report encourages and advances the location of office region, relative to Urban Centres, and relative to Frequent development in Metro Vancouver’s Urban Centres by Transit Network (FTN). The report also includes historic exploring the factors that influence regional-scale office reporting of the pattern of office building development in development and occupancy decisions, and identifies the region over time. challenges and opportunities for office potential in Urban Centres. The report identifies key issues and trends Other sections of the report have been updated, affecting office space to better inform government plans specifically the section about office space trends (Chapter and policies. 3), including information on changing office needs and the growing importance of proximity to rapid transit. The report was informed through an investigation of the The report also includes results from in-depth interviews market and planning factors that influence the location, completed between November 2011 and January 2013 type, and amount of office development and occupancy (Chapter 4). Various update edits have been made in Metro Vancouver. Information about the office market throughout the document. and the office development process was gathered through a review of relevant publications, compilation of Along with a summary of the office building inventory a comprehensive inventory database of office buildings in the region and key findings, the report includes in the region, and in-depth interviews with experienced areas for further exploration and opportunities for industry participants, including major office investors, Metro Vancouver, municipalities, developers and developers, tenants, and brokers, and municipal planning other organizations to work together to advance office and economic development staff. development in Urban Centres. Executive Summary - March 2015 1 Office Development in Metro Vancouver’s Urban Centres KEY FINDINGS: OFFICE INVENTORY AND GROWTH • The Metro Vancouver region has a total of • Much of the office inventory in the region was approximately 74 million sq. ft. of office space in 1,332 constructed during the 1980s and 1990s. There were buildings 10,000 sq. ft. or larger. relatively few new large office buildings developed in the late 2000s and early 2010s. • 45% of the office space in the region is located in the Metro Core (downtown Vancouver and the Broadway • Despite some recent years with a higher proportion Corridor); 51% is located in Vancouver. Other notable, of development in Urban Centre and Frequent Transit although much smaller, markets include Burnaby, Network locations, there is not yet a clearly consistent Surrey, and Richmond. long-term trend towards a substantially higher proportion of development occurring within Urban • Most office buildings in the region are under 100,000 Centres or near frequent transit service. sq. ft. in size; the average building size is 55,000 sq. ft. and the median building size is 31,000 sq. ft. • A series of new major office developments are currently underway, mostly in downtown Vancouver, • In terms of regional land use designations, 76% of the with completions in 2014-2016. office inventory was located on General Urban, 20% on Mixed Employment, and 4% on Industrial. 2014 Metro Vancouver Office Inventory WEST VANCOUVER NORTH NORTH VANCOUVER VANCOUVER CITY DISTRICT PORT MOODY BURNABY COQUITLAM UBC/ UEL VANCOUVER PORT COQUITLAM PITT NEW MEADOWS WESTMINSTER MAPLE RIDGE RICHMOND SURREY DELTA LANGLEY TOWNSHIP LANGLEY CITY N 5 km WHITE ROCK Oce Inventory Land Use Transportation Year built Size (office area) Prior to 2011 20,000 - 100,000 sq. ft. Urban Containment Frequent Transit Sea Bus Highways Boundary (UCB) Network (FTN) 100,000 - 249,999 sq. ft. West Coast Express Major Roads 2011 to 2014 250,000 - 500,000 sq. ft. Urban 400m from FTN bus, 500,000 sq. ft. and over Centres 800m from rapid transit Executive Summary - March 2015 2 34% Office Development in Metro Vancouver’s34% Urban Centres 34% Of the office space in the 2014 inventory 34% Of the office space built between 1990 and 2014 (74 million square feet in 1,332 buildings with 34% (48 million square feet in 670 new buildings with 10,000 sq. ft. area or more): 10,000 sq. ft. area or more): 66% is located in Urban Centres 63% is located in Urban Centres (45% in Metro Core, 15% in RCCs, 6% in MTCs) (46% in Metro Core, 12% in RCCs, 4% in MTCs) 34% 37% 34% 34% is located outside of Urban Centres 37% 37% is located outside of Urban Centres 34% (21% within walking distance of transit) 37% (21% within walking distance of transit) 34% 37% 60% is located near rapid transit service 61% is near rapid transit service 34% (within 800 metres - ten minute walk) 37% (within 800 metres - ten minute walk) 24% is located near FTN bus service only 22% is near FTN bus service only (within 400 metres - five minute walk) (within 400 metres - five minute walk) 37% 13% is located both outside of Urban 16% is located both outside of Urban 37% Centres and not near FTN service Centres and not near FTN service 37% Distribution by Centre Type and Transit Service Area 37% 2014 Office Inventory 37% Distribution by Urban Centre Type and Transit Service Area (2014) 40 30 20 Total Area (million square feet) 10 Metro Core Regional City Municipal Town Not in an Urban Centres Centres Centre Within 800 metres of Rapid Tranist 29,400,000 7,900,000 1,600,000 5,000,000 Station Within 400 metres 4,000,000 1,400,000 2,300,000 10,300,000 of FTN Bus Only Not Near FTN n/a 1,800,000 200,000 9,700,000 Service Executive Summary - March 2015 3 Office Development in Metro Vancouver’s Urban Centres Inventory by Year Built 700 600 500 400 A map of the inventory 300 distribution Building Size by year built is (thousands of sq. ft.) available on 200 page 25. 100 page 25 1950 1960 1970 1980 1990 2000 2010 Year Built Summary A large proportion of existing and new office space in the region is located in the Metro Core, centered in downtown Vancouver, and at other locations with rapid transit service. Smaller Urban Centres are generally attracting only limited office development activity. During the late 2000s to early 2010s period, there were relatively few large office building developments. However, since then, a number of major projects have advanced, with completions in 2014-2016. Most of these new buildings are in downtown Vancouver, but there are major projects at locations with rapid transit service, such as Metrotower III in Metrotown, Broadway Tech at Renfrew station, the Brewery District at Sapperton station, and Anvil Centre in downtown New Westminster. Executive Summary - March 2015 4 Distribution by Subregion 2014 Office Inventory Office Development in Metro Vancouver’s Urban Centres KEY FINDINGS: OFFICE TENANT TRENDS • Few large corporate headquarter offices are located in Inventory Distribution by Subregion (2014) 37% the Metro Vancouver region compared to other major centres, such as Calgary and Toronto. Delta Northeast Ridge Sector • For downtown Vancouver, the average office tenant Meadows 1% 2% Langleys size is relatively small at 7,200 sq. ft.; 54% of all office <1% space in downtown Vancouver is occupied by tenants 3% under 20,000 sq. ft. in size. North • There is an ongoing trend towards less office space Shore Northper employee through greater workplace design Shore 5% efficiencies. Richmond • Modern offices increasinglyNortheast have open space concept 9% Sector designs, with fewer enclosed offices, but more Ridge Burnaby / Surrey / Vancouvermeeting / space as well as on-site amenities.Meadows UBC New Vancouver / UBC White Rock • Tenants increasinglyWest. prioritize and are willing to 51% 10% pay more for office space located near rapid transit service, thus driving demand for development at Richmond SkyTrain stations.