Despite the addition of about two million square feet of prime space in the past 18 months, Vancouver’s office vacancy rate has fallen to 6.9%, second-lowest in Canada, according to Colliers International. With nearly 340,000 square feet taken up in 2016’s third quarter alone, the stage is set for the next round of hurry-up construction.
Office demand across the Metro region is expected to increase in 2017 following recent federal approval of new liquefied natural gas and oil pipelines, an expanding tech and film industry and a strengthening of the mining and engineering sectors.
In all, four new towers are planned with a total of 600,000 square feet of Class A space. Early betting is that Morguard’s 227,000-square-foot, 25-storey building at 601 West Hastings will lead the wave, with an estimated completion in 2019.
Two new office towers, the Exchange on Howe Street by Credit Suisse and Serracan Properties’ seven-storey building on Seymour Street, are under construction and are scheduled to be completed in 2017.
A number of Vancouver’s new office projects, such as the 235,000-square-foot Burrard Place by Jim Pattison Developments/Reliance Properties and the Cardero complex by Bosa Properties/Arpeg Holdings, include a highrise residential component.
This year could also see heated action in office transactions. In 2016, a record $1.9 billion in office building sales was reported in the first half alone, dominated by the bellwether purchase of the Bentall Centre four-tower portfolio by China-based Anbang Insurance Group for $997 million. A Germany-based investor bought the Royal Centre office tower downtown in April for $427 million.
The relatively low vacancy rate, the low Canadian dollar and rising lease rates – an average of $47.28 per square foot downtown – also point to office investments breaking to the upside in 2017, according to Colliers.