Office Market Discussion

[djmk]

Originally Posted by officedweller

MEC Building Sells in $103 Million Deal
http://www.vancouvermarket.ca/2021/03/28/mec-building-sells-in-103-million-deal/

Crestpoint made 28 millions in 3 years.

Nice piece of business.

[jollyburger]

There is also increased vacancy in buildings that Dubuque described as A- or B-class structures. Buildings that fall under the C-class designation often have a historic or heritage nature, and have been upgraded to be attractive to some, he said.

“I’m not going to be surprised if I see some of those A- and B-class buildings repurposed to be rental buildings – multi-family rental buildings,” he said.

One challenge in converting office buildings to residences is that floor plates can be much larger, and it can get tricky designing floor plates so all homes can have windows.

Some B-class buildings, however, have smaller floor plates that give them potential for this repurposing, Dubuque said.

He sees the lower-grade office-building conversions as happening not only because they have higher vacancy, but also because employers want to be in better digs.

https://biv.com/article/2021/03/vancouver-office-leasing-starts-pick-after-pandemic-slowdown

[Changing City]

Originally Posted by jollyburger

https://biv.com/article/2021/03/vancouver-office-leasing-starts-pick-after-pandemic-slowdown

It's possible that a few B and C class offices will convert to residential, but they would tend to be relatively small, and probably insignificant in terms of the overall market. They could remove some of the cheaper space, which has some impact on startups and smaller businesses, but there are new office properties in Mount Pleasant and in areas like Railtown, which fill that role. In the CBD it would only be theoretically possible to convert a heritage office building, and there are very few of those. Older buildings can only be used as commercial space - so could convert to a hotel for example. (Sonder were doing that with the Arts & Crafts Building on Seymour).

The most likely candidates are buildings that can already theoretically be converted to residential, like in the Yaletown warehouse district, or along Water Street. There was a fair amount of commercial to residential change in the 1990s and into the early 2000s, but nothing for several years. Even the recent Water St project (leased to Microsoft) could have been residential, and was developed as a commercial building.

[officedweller]

There also seems to be a resurgence of office space (via tower podiums) into shoulder areas where some of those conversions have taken place in the past (i.e. Howe / Hornby south of Nelson - London Place and 1010 Howe.

[LeftCoaster]

Google, following Amazon's example, is sending nearly all their workers back to the office.

https://www.cnbc.com/2021/03/31/google-s...ning-and-puts-limits-on-remote-work.html

Looks like the office isn't dead just yet.

[Migrant_Coconut]

That can't be right, we have it on good authority that the office market is dead forever and everybody will work from home now!

[whatnext]

Assessment of Vancouver's office market in the Sun:

Downtown Vancouver office vacancy rate exceeds level of 2008 financial crisis
"Companies aren't abandoning their office premises, but where there's an opportunity to slim down, and make do with less, that's where we're at," said Ross Moore of Cresa.
Author of the article: Joanne Lee-Young
Publishing date: Apr 08, 2021

Downtown Vancouver’s office vacancy rate is currently at 6.7 per cent, putting it above the peak levels that followed the global financial crisis in 2008 when many companies let go of their prime office space.

To compare, in the first quarter of 2020 a year ago, the rate was 3.1 per cent.

here have been other steep increases in vacancy rates, according to Ross Moore, a managing broker at real estate company Cresa, but that was because new buildings were coming onto the market, such as in 2015 when the addition of Telus Garden, 745 Thurlow, MNP Tower and others pushed the vacancy rate up to 9.6 per cent.

There are 13 office buildings currently under construction in downtown Vancouver. With those additions, the vacancy rate could climb to 18.3 per cent, “which is a whole lot more sobering,” said Moore.....

https://vancouversun.com/business/downto...e-exceeds-level-of-2008-financial-crisis

[jollyburger]

Originally Posted by LeftCoaster

That is not Microsoft space, but Mobify, who were just acquired by Salesforce last year. I wouldn't be surprised if Microsoft took it though.

I suspect the Mobify team will join the rest of the Vancouver Salesforce team at their office in 333 Seymour.

I guess Microsoft took the space?

20,019 Microsoft 725 Granville Street Downtown Technology Sublease

http://cbre.vo.llnwd.net/grgservices/sec...95482&h=546dad7c3c929a181309bc292480fa79

[Sheba]

...and now for something completely different - Federal government's plan to convert commercial properties into homes raises more questions

The federal government thinks it can address the country’s red-hot housing market by having property owners convert commercial buildings, left vacant due to the pandemic, into livable spaces, but industry watchers question whether that plan is realistic.

The Liberals, in Monday’s federal budget announcement, indicated that $1.3 billion of previously announced funding will be reallocated to create more homes. Of that, $300 million will be dedicated to converting vacant commercial properties into 800 units of market rental housing.

“As the demand for retail and office space has changed due to COVID, some landlords, particularly in major urban cores, are facing higher vacancies,” the budget stated. “This is an opportunity for property owners and communities to explore converting excess space into rental housing, enhancing the livability and affordability of urban communities.”

...

[officedweller]

It's already being done, as hotels are 'commercial' space and they're being bought up left right and centre.

As for retail and office space, it would depend on the particular building, its layout and facilities (including access to fresh air).
Older office blocks may work.

[jollyburger]

Wow 800 units. That's big thinking out of Ottawa.

[Sheba]

Originally Posted by officedweller

It's already being done, as hotels are 'commercial' space and they're being bought up left right and centre.

As for retail and office space, it would depend on the particular building, its layout and facilities (including access to fresh air).
Older office blocks may work.

The article mentions that:

A hotel guest room, he said, already has a bathroom, living space and heating, ventilation and air conditioning (HVAC) unit, as well as fairly wide corridors and elevators, so all it really needs to be a functional home is a kitchenette.

But a big problem with converting office spaces is planning, since those buildings don’t have sufficient plumbing to support housing units, and a developer would have to account for that when adding suitable kitchens and washrooms.

Originally Posted by jollyburger

Wow 800 units. That's big thinking out of Ottawa.

[jollyburger]

^^ I thought it was a typo and I was going back looking for 8000 or 80000

[jollyburger]

Just going through Colliers Q1 report.

Best Buy is going into 425 West 6th Avenue (70K sq feet)

Ernst Young relocating to Oceanic Plaza

https://www.collierscanada.com/en-ca/research/vancouver-office-market-report-2021-q1

[officedweller]

Originally Posted by jollyburger

Just going through Colliers Q1 report.

Best Buy is going into 425 West 6th Avenue (70K sq feet)

Ernst Young relocating to Oceanic Plaza

https://www.collierscanada.com/en-ca/research/vancouver-office-market-report-2021-q1

EY must be temporary until their offices at The Stack are finished - like Deloitte on Granville.

[jollyburger]

Originally Posted by officedweller

EY must be temporary until their offices at The Stack are finished - like Deloitte on Granville.

Yeah Oceanic is owned by Oxford. 31K square feet.. they have 60K sq feet in The Stack.

[officedweller]

I think EY currently has 3 floors in TD Tower (22nd, 23rd and maybe 16th)
- 3 x 16,000 per floor.

[jollyburger]

Looks like Corus is leaving the 20th floor as well.

https://dnyhc7e4ce952.cloudfront.net/media/pdfs/brochure_8cd1a57714.pdf

The Offices at Burrard Place seem to show some floors have been leased

Listed as available "Floors 4, 5, 7-10, 11-13"

Elastic Path is subleasing their floor at 745 Thurlow. 17K sq feet.

[Changing City]

Originally Posted by jollyburger

The Offices at Burrard Place seem to show some floors have been leased

Listed as available "Floors 4, 5, 7-10, 11-13"

Elastic Path is subleasing their floor at 745 Thurlow. 17K sq feet.

That's a bit odd, because floors 1 to 3 are the Pattison car dealership, so it would mean that they've only leased floor six. Currently CBRE, the leasing agents, are showing all floors from 4 to 13 as being available So is the Reliance website.

The developers did get their amended rezoning approved, to add school as an approved use.

[Changing City]

Originally Posted by jollyburger

Just going through Colliers Q1 report.

Best Buy is going into 425 West 6th Avenue (70K sq feet)

I wonder if that means Best Buy are expanding their office space (which seems unlikely) or relocating some or all of their head office from Big Bend in Burnaby. They currently claim 1,100 staff at their headquarters, so that amount of space could only accommodate some of them. Perhaps a hybrid office / work from home scenario that some companies seem willing to try?