Vancouver and Toronto office construction boom threatens to drain suburban growth

[SFUVancouver]

Interesting article in the Sun regarding the recent office building booms in downtown Vancouver and Toronto and the implication for suburban municipalities.

Vancouver and Toronto office construction boom threatens to drain suburban growth: study

By Garry Marr, Postmedia News November 13, 2013 1:01 PM


We’ve never seen so much office construction in downtown Vancouver or downtown Toronto

New construction of downtown office buildings in Canada is threatening to leave older towers behind and the suburbs out in the cold, says a new study.

A survey of executives by PricewaterhouseCoopers LLP for its Emerging Trends in Real Estate study suggests there could be particular problems in Toronto and Vancouver which have both seen a surge in new construction.

PwC says about 4% of office inventory was under construction in mid-2013, which was about four times the level it is in the much larger United States office market.

“What’s different about this cycle is that we have more downtown development. We’ve never seen so much office construction in downtown Vancouver or downtown Toronto,” said a fund manager quoted in the survey.

Given such abundant choice of office space, tenants catering to younger workers tend to choose the newer towers. The same trend of catering to younger works who prefer to live and work downtown could leave suburban office complexes with vacancy issues, the study said.

“The kids know exactly what they want as it relates to office,” said Lori-Anne Beausoleil, national real estate leader for Canada for PwC. “We have a whole urbanization trend. While before it was we want to be out in the burbs, people want to be in the core. People want to work eat and play all in the same area. Part of this is we don’t have the infrastructure so you either face hours of traffic or you can be walking distance or near transit.”

Read more: http://www.vancouversun.com/business...#ixzz2kZbvvnBT

[Canadian Mind]

I find it odd Calgary wasn't mentioned. Don't they have a much larger amount of office being constructed?

[queetz@home]

Originally Posted by Canadian Mind

I find it odd Calgary wasn't mentioned. Don't they have a much larger amount of office being constructed?

I think its because Calgary doesn't have that much suburban office space to begin with. Calgary has some non-downtown office areas (including some big firms) but historically, it hasn't really experienced companies moving away from its downtown core in favour of the suburbs (does Calgary even have suburbs??), unlike what happened in Vancouver (NPA's Living First) and Toronto (ridiculously high downtown taxes). So Calgary office space situation simply doesn't apply within the context of the article (suburban vs downtown office space).

[spm2013]

Yeah, it was just the article's look at downtown vs. suburban. Here's their blurb in the report:

Calgary (1). Growth, growth, growth is in Calgary's future, as evidenced by economic fundamentals, commercial real estate volume, and Emerging Trends survey results. An expanding economy is requiring a larger and more highly skilled workforce, and numbers show that this trend will continue. Employment forecasts indicate growth of 2.8 percent next year and 2.9 percent in 2014. This growth, driven mostly by the oil and gas industry, has made it challenging to acquire high-quality real estate in this market. Absorption of prime properties has reached record levels, and rents are continuing to be pushed due to limited supply. "It's harder to bid on local Calgary-area 'A'-quality assets." In 2013, this absorption and lack of space looks to continue, especially within office- type and industrial employment space because job numbers in these areas are expected to increase 3.6 percent and 2.6 percent, respectively. Construction will increase in the housing and non residential arenas, but will be nowhere near pre-crisis levels. Calgary has impressive results and rankings in this year's survey, registering first in investment prospects, first in development prospects, and second in homebuilding prospects.

http://read.ca.pwc.com/i/90582/15

[officedweller]

I think it just impacts "remote" office parks, and I think it's a natural progression.

Unless there's a need to co-locate warehousing and office space, there's not much benefit for being in a suburban office park.

In Metro Vancouver, you see the progression not only with office space downtown, but smaller office components at transit oriented developments at regional town centres (i.e. Brentwood (Madison Centre, Citi, Solo, Brentwood Town Centre), Marine Gateway, Aberdeen). We also have some light industrial / office park areas with SkyTrain access (Lake City, Grandview, Braid, Templeton).

[libtard]

The article says "we've never seen this much office construction in downtown Vancouver"

That can't be true. Vancouver has had bigger office buildings booms than this

[queetz@home]

Originally Posted by libtard

The article says "we've never seen this much office construction in downtown Vancouver"

That can't be true. Vancouver has had bigger office buildings booms than this

Compared to other cities experiencing a *real* office construction boom both in the past and present, the downtown Vancouver situation isn't really that big a deal.

Its just that we had decades of ridiculously low to non-existent office construction, the last major one was three buildings in the 20 storey range (just when the BC Liberals was about to take over) the "flurry" of activity we're seeing today seem like a mega boom. Even I was obsessed with adding 11 floors on Bentall 5...11 measeley floors while in my hometown, suburban office construction consists of 40+ storey skyscrapers, which were kinda meh (well not really but still).

Can't be help really if you lived in the area for so long with littel activity. Most people outside Vancouver wouldn't be excited on office buildings less than 40 storeys like in the new Telus Gardens or MNP, no matter how pretty, and yet here we are....

[AudiA3]

Good and bad... Depending on where you live.. It would be great if most jobs are concentrated close to the skytrain stations, so convenient.