The Exchange | 115.7m | 31fl, 13fl | 400,000sqft. | Completed

[LeftCoaster]

Originally Posted by s211

Trust me, the market isn't welcoming this, or any other proposal that would go ahead at this time.

It's awfully presumptuous to make such bold statements about a highly complex and nuanced market like the Vancouver office market. The people behind this project have far more experience and information about commercial development than you. I think they might know what they are doing...

Also keep in mind Credit Suisse is is not a current owner of office property in Vancouver, so they will be poaching tenants purely from their competition. And as the competitions older buildings empty out they will be filled by tenants from lesser buildings and more distant buildings, in what is called a flight to quality. This type of thing can be hard on landlords but is great for fostering business growth and centralization of employment. If a landlord is willing to take a risk on a new building like this it is a great ting for everyone but the owners of lesser quality product.

That all said, this tower might not even be the last to get started this cycle...

[trofirhen]

Originally Posted by LeftCoaster

It's awfully presumptuous to make such bold statements about a highly complex and nuanced market like the Vancouver office market. The people behind this project have far more experience and information about commercial development than you. I think they might know what they are doing...

Also keep in mind Credit Suisse is is not a current owner of office property in Vancouver, so they will be poaching tenants purely from their competition. And as the competitions older buildings empty out they will be filled by tenants from lesser buildings and more distant buildings, in what is called a flight to quality. This type of thing can be hard on landlords but is great for fostering business growth and centralization of employment. If a landlord is willing to take a risk on a new building like this it is a great ting for everyone but the owners of lesser quality product.

That all said, this tower might not even be the last to get started this cycle...

Do you know of any others that might get started within this cycle of office construction?

[phesto]

What some people don't understand is that there is still even more demand for new office space downtown, but that the overall demand for office space has likely peaked.

In other words, the vacancy rate will indeed shoot up, but it will be the older A and B class buildings that suffer; it's not that the new buildings will simply sit empty. As companies leave older buildings, back filling their old spaces will be impossible.

It's flight to quality.

[PaperTiger]

Originally Posted by phesto

What some people don't understand is that there is still even more demand for new office space downtown, but that the overall demand for office space has likely peaked.

In other words, the vacancy rate will indeed shoot up, but it will be the older A and B class buildings that suffer; it's not that the new buildings will simply sit empty. As companies leave older buildings, back filling their old spaces will be impossible.

It's flight to quality.

Impossible at current rates. Entirely possible if adequately respond to the new market conditions.

[GMasterAres]

My wife works in the older Province building downtown at Water Front. They in the last year or so had to do a complete renovation to "upgrade" the look and feel of the building inside just because of these new projects coming online. As has been pointed out, older buildings and older landlords will have tenants vacate to these newer buildings if the price is right and location is right.

So to maintain their current lease rates, many of the older buildings need to be revamped or are revamping to keep tenants on board. I must say too that now that the project is largely complete, even though it looks like the old building from the outside (which isn't too bad anyways to me, throws back to an older generation), the inside after renovations is outstanding and extremely modern.

From a business standpoint, when you're bringing in clientel especially International clientel as her business does, impressions can be everything esp. in the consulting business. So the upgrade of the building has benefitted them directly and saved them having to relocate their entire office.

As was mentioned above, the office space market is quite complex and nuanced. You can't simply go "we have X office space available, and Y vacancy rates, so we are (circle one) Good/Bad."

It's not that easy.

[jlousa]

I think we're seeing that across the board, we just got LEED Platinum certification and we're constantly spending money on capital improvements and we don't even have the risk of losing our tenants. Harbour Centre has just undergone a major upgrade as well, and as you mentioned did 200 Granville.
I think we have to take account that while demand is there for new office space, there is only so much demand of people willing to pay $60psf for new AAAclass space. These new projects need to charge in that range to make the numbers work. The older buildings can afford to charge less but will continue charging what the market will bear. So if the market is full of tenants paying $40psf that can't afford to move up into the new space we end up with empty new space w/o tenants and the current space won't drop in price. Most likely we will see additional tenants upgrade and across all classes but I doubt we'll see any price reductions. Property management companies will have to keep space empty instead of leasing out vacant space at less money then existing tenants are paying otherwise they run into bigger issues.

[PaperTiger]

That's where TI allowances and rent "holidays" come in. Essentially, the market will become more competitive and the tenants get more leverage.

They may still charge $40psf on paper but the inducements lower the overall cost to the tenant.

If the Avison Young report is correct and we do hit 10.5% vacancy, the new projects will stop or slow until the extra inventory is absorbed.

I think we are seeing a shift back to the normal commercial cycle for downtown. A cycle that was pushed out of whack by the insane residential pressures that we were seeing for through the 2000's.

[SFUVancouver]

Another factor to consider is the office-to-residential moratorium that I believe is still in effect. With the removal of the option to convert an aging office building to residential, rather than investing to keep it competitive as an office property, the owners essentially have no choice but to invest in interior renovations, IT infrastructure, HVAC upgrades, etc., and that might require the sale of the property to new, better capitalized owners.

At macro economic and regional planning level, I could not be more pleased to see the twin trends of new office construction in the downtown and in suburban locations along rapid transit.

[LeftCoaster]

Originally Posted by trofirhen

Do you know of any others that might get started within this cycle of office construction?

I've heard some rumours but that's all they are at this point. That said they weren't from some guy in an orange vest so it will be interesting to see.

Originally Posted by PaperTiger

That's where TI allowances and rent "holidays" come in. Essentially, the market will become more competitive and the tenants get more leverage.

They may still charge $40psf on paper but the inducements lower the overall cost to the tenant.

Landlords aren't idiots, they work to an NER. Concern with face rate is simply an optics game.

[jlousa]

I agree we'll see lots of prime tenants being offered generous rent holidays and TI allowances in order to poach them. Probably even breaks on operating costs too. Better time to be a tenant then the property management company at this point. That said we aren't getting a big enough dump to kill the yields and the projects that have broken ground are all backed by owners that can afford to be slightly patient. I don't believe all the projects we've heard about will come along this cycle, but certainly at least a couple more.

[Prometheus]

Given all the commercial projects currently proposed or under construction, it is a shame that there is not at least one signature, landmark tower among them.

[PaperTiger]

Originally Posted by Prometheus

Given all the office buildings that are currently being built or proposed, it is a shame that there is not at least one signature, landmark tower among them.

I think MNP is a signature tower. Not a true landmark in the city defining sense though.

[Jebby]

Originally Posted by Prometheus

Given all the commercial projects currently proposed or under construction, it is a shame that there is not at least one signature, landmark tower among them.

If this tower could have gone up to 150m I think it definitely would have been a landmark tower.

[Infrequent Poster]

Originally Posted by Jebby

If this tower could have gone up to 150m I think it definitely would have been a landmark tower.

I find it somewhat depressing that all it takes for a tower to be a landmark in Vancouver is to hit the 150m mark

[dleung]

Originally Posted by Prometheus

Given all the commercial projects currently proposed or under construction, it is a shame that there is not at least one signature, landmark tower among them.

At least this isn't Toronto lol:


All major office towers in the last decade

[Klazu]

Big yawn at those Toronto towers. Just so damn boring.

I agree that MNP tower is a landmark tower, but it would have benefit so much from being around 175 meters in height.

[Jebby]

Originally Posted by Infrequent Poster

I find it somewhat depressing that all it takes for a tower to be a landmark in Vancouver is to hit the 150m mark

That's not what I said. I said with this design, had it been taller, it would be a signature tower. The way things are, it gets lost in the sea of similar sized towers, despite it having an exceptional design.

[Infrequent Poster]

Originally Posted by Jebby

That's not what I said. I said with this design, had it been taller, it would be a signature tower. The way things are, it gets lost in the sea of similar sized towers, despite it having an exceptional design.

Not to be an asshole but, nowhere in your post did you say anything about the design of the building, see look this is what you said...."If this tower could have gone up to 150m I think it definitely would have been a landmark tower."

Perhaps what you are trying to say is, that despite not actually saying anything about the exceptional design (personally I disagree with this statement) you were actually meaning the exceptional design and not the height.

Personally I feel that any tower that hits 150m in Vancouver is somewhat of a "landmark" tower, because of the relatively modest heights of Vancouvers towers. Which was the depressing part (to me)

[a very long weekend]

Originally Posted by phesto

What some people don't understand is that there is still even more demand for new office space downtown, but that the overall demand for office space has likely peaked.

In other words, the vacancy rate will indeed shoot up, but it will be the older A and B class buildings that suffer; it's not that the new buildings will simply sit empty. As companies leave older buildings, back filling their old spaces will be impossible.

It's flight to quality.

is this where we might see pressure brought to bare on the city to exempt residential conversions from the residential moratorium? like, a project like 1090 west pender would look a lot different if that building could have been converted to residential and the new office tower built on the adjacent low rise portion of the site, rather than knocking down the existing structure. seems like similar cases ought to push the city out to reconsider.

[NewWester]

Originally Posted by Klazu

Big yawn at those Toronto towers. Just so damn boring.

I agree that MNP tower is a landmark tower, but it would have benefit so much from being around 175 meters in height.

If MNP were much taller than it is, it would completely dwarf the Marine Building, which IS ABSOLUTELY a landmark tower. At its current height it plays of the The Marine building in a really cool way (like a mountain behind the structured architecture of The Marine) that I don't think it would as well if it were much, much taller. CONTEXT is so much more important than height.