Office Market Discussion

[Klazu]

Cool flyby of EA's campus expansion:

https://www.linkedin.com/posts/canadian-...opment-activity-6980955103700643840-csPi

[jollyburger]

Nothing new..

Low Tide Properties plans new Vancouver life sciences building

Vancouver-based real estate company Low Tide Properties continues to solidify its presence in the life sciences space with plans to bring another building to the market in the city’s False Creek Flats neighbourhood.

Lab 29, to be located near the new St. Paul’s Hospital campus, will add more than 200,000 square feet to the market in an industry that is burgeoning in Vancouver.

“In terms of life science space, we’re likely the largest landlord in the City of Vancouver,” said Adam Mitchell, vice-president of asset management and development for Low Tide Properties.

“We operate over 500,000 square feet of lab space . . . probably have about 14 different tenants in that space. We’ve owned lab buildings since 2013. We’ve got a long history of owning and operating life science space in the City of Vancouver.”

The company currently has four dedicated life science buildings and a fifth one that is half life science and half office.

“The reason why we’re so specific with the type of buildings we buy is we like to view ourselves as a true partner for our tenants. It takes a lot of management knowledge to run a life science building properly for these tenants,” explained Mitchell.

“So it’s about being able to offer them a skillset on our side in terms of the building and how we manage it that will kind of allow them to leverage talents and resources to do the incredible things that they all do.”

Low Tide’s evolving building portfolio
Low Tide, a privately held investment and operating company, has been around since 2010. It either buys or develops properties and holds them in a portfolio for the long term.

All management of properties is done in-house, from leasing to building operations to property management. It also owns a number of properties in the Vancouver and Seattle markets.

The company specializes in what it refers to as “creative office” – technology and life science space. It also focuses on flex industrial space in urban locations.

In the Seattle area, it owns a number of multiresidential properties, primarily apartment buildings with ground-floor retail.

Low Tide owns a neighbouring building to Lab 29 which is at 1618 Station St. and occupied by STEMCELL Technologies.

Also nearby, on Great Northern Way, Low Tide owns nine properties – some outright and some in partnership with PCI Developments – which are a mixture of office buildings as well as some development sites in and around the SkyTrain Station.

Mitchell said the False Creek Flats area has been labeled as the innovation district which includes education and health uses.

Lab29 will be located next to the STEMCELL building.

“It’s a great opportunity to add a dedicated life science building to the market because really there hasn’t been a purpose-built life science building for quite some time in the City of Vancouver as land costs have gone higher and construction costs for these buildings are quite high,” said Mitchell.

“It gets harder and harder to justify building them.

“But we thought we had a really good opportunity here with the surrounding complementary uses of the existing building and the St. Paul Hospital coming in, that we could create a dedicated building where the market really wanted in this area that offers all these amenities and synergies that are right adjacent to the site.”

Startups constrained by life sciences property market
Mitchell said Vancouver is a great place for startup companies but once they get to a certain size they run out of options in the market because there hasn’t been much new lab space built in the city over the last 10 to 20 years.

“What often happens is these companies grow to a point where they are acquired by larger companies,” said Mitchell.

“If they’re running it themselves, they just need more space and if they’re trying to do that in the City of Vancouver, they run out of options and they have to leave.

“Either the tenant will leave the city and go somewhere else or if they get acquired by a larger U.S. lab company they’ll get consolidated down to either Seattle or San Francisco or Boston.

“These companies have a great platform to get started here but then they can’t continue to grow and operate here and we felt that was a huge gap in our market to be able to keep and retain some of these companies that are really doing world-leading research.”

Blair Quinn, vice-chairman of CBRE in Vancouver, sold the Lab 29 property to Low Tide more than 10 years ago as well as the STEMCELL building.

He said the Vancouver market is behind in inventory for the life science sector.

“Now Low Tide is endeavoring to build what they’re calling the first multi-tenant, speculative life science building in 15 years since the last one next door was built,” said Quinn.

“Their intent is to capture this burgeoning life science market and pre-build a 210,000-square-foot life science- or lab-capable building.”

Pre-leasing underway for spec life science building
CBRE has been retained as the leasing team to market and pre-lease the nine-storey building in the shadow of the future St. Paul’s Hospital.

It will include a 10,000-square-foot rooftop sky garden, 6,000 square feet of ground-floor food service and retail, 1,300 square feet of rooftop conference space and a 2,500-square-foot gym.

The project is currently before the city for a development permit. Quinn said Lab 29 is expected to break ground in June with occupancy in 2026. The new St. Paul’s Hospital is scheduled to open in 2027.

“St. Paul’s is a medical research and development hospital. . . . It’s going to be a real medical science research hub,” said Quinn.

“That anchors the northside of the False Creek/Mount Pleasant area. The southside is anchored by BC Cancer and Vancouver General Hospital. So you’ve got three major medical institutions all in the same ecosystem.

“All the life science companies have chosen this particular sub-market, this medical district, as the place to be to be close to those hospitals and close to all the employees and quite frankly close to town and close to transit and all the amenities.”

https://renx.ca/low-tide-properties-vancouvers-largest-life-sciences-landlord

[SpongeG]

Tech firms’ embrace of WFH leaves downtown Vancouver in ‘state of flux’
Big tech companies expanding in suburbs instead, says Avison Young report
By Tyler Orton | November 21, 2022

Billionaire Elon Musk’s disdain for working from home hasn’t quite caught on with the rest of the technology sector, which has eagerly embraced remote working in a bid to recruit and retain highly sought-after tech workers.

It’s a trend that’s left downtown Vancouver in a “state of flux” after the pandemic rapidly shifted employee and employer expectations for the workplace, according to a new report from Avison Young (Canada) Inc.

...

https://biv.com/article/2022/11/tech-fir...ueSOEKpGIla1O0w5UqqjC0keuzSyMadZuLHk3rGo

[jollyburger]

New?

Nintendo leased 14,500 SF at Suite 200, 4402 Skyline Drive, Brentwood, Burnaby

Also says Lululemon got some more space near Granville Island

Lululemon leased 30,000 SF at 1523 West 3rd Avenue

https://www.naibc.ca/wp-content/uploads/2022/10/NAI_Vancouver-Office-Report_Q3-2022_web.pdf

[whatnext]

Vancouver’s office vacancy rate escalating quickly according to the Globe & Mail:

Toronto and Vancouver’s office vacancies on the rise as companies try to get rid of space
RACHELLE YOUNGLAI REALESTATE REPORTER
PUBLISHED YESTERDAY
FOR SUBSCRIBERS

Office vacancy rates in downtown Toronto and Vancouver are climbing quickly, as well-known businesses such as Plenty of Fish, Air Miles and PricewaterhouseCoopers LLP try to get rid of unneeded space amid the shift to remote work and economic uncertainty.

Toronto’s vacancy rate reached 15 per cent at the end of September, according to new data from commercial real estate firm Altus Group. That is up from 4.2 per cent in 2019 prior to the start of the pandemic. The current level tops vacancies during the Great Recession and marks the highest since 2003 when Toronto was dealing with the aftermath of the dot-com bubble and the vacancy rate was 13.3 per cent.

In Vancouver, the vacancy rate hit a two-decade high at 11.5 per cent, according to Altus. That compares to 3.5 per cent in 2019…

https://www.theglobeandmail.com/business/article-office-vacancy-toronto-vancouver/

[jollyburger]

Canaccord is going into Stack

1 Canaccord
Genuity 98,700 SF Downtown Prelease 1133 Melville Street

https://www.cresa.com/vancouver-bc/Locat...arch/Q3-2022-Office-Market-Report---1-pg

3 Kaseya 22,000 SF Downtown Sublease 545 Robson Street

` Colliers Property Management committed to 31,000 SF (two floors) at 1066 West Hastings
Street, while the brokerage operations will relocate to 31,000 SF at 1067 West Cordova Street
` MLT Aikins expanded by taking an additional floor of 16,000 SF at 1066 West Hastings Street
` Willowtree (a US software company) leased 12,784 SF on the 4th floor at 401 West Georgia St
` Ansys Canada leased 21,000 SF at 1095 West Pender Street
` Productboard subleased 12,000 SF at 411 Dunsmuir Street

https://www.naibc.ca/wp-content/uploads/2022/10/NAI_Vancouver-Office-Report_Q3-2022_web.pdf

[Changing City]

Originally Posted by whatnext

Vancouver’s office vacancy rate escalating quickly according to the Globe & Mail:

In Vancouver, the vacancy rate hit a two-decade high at 11.5 per cent, according to Altus. That compares to 3.5 per cent in 2019…

https://www.theglobeandmail.com/business/article-office-vacancy-toronto-vancouver/

That's odd, because the Colliers Office Market report for Q3 2022 says The Greater Vancouver Area office market continued to see net positive uptake of space and limited new supply in Q3, which restrained the growth in net absorption. The office vacancy rate remained relatively stable increasing to 5.9% from 5.8% last quarter.

CBRE found a slight increase, but only 0.3% to 6.6% (and slightly lower vacancy in class AAA office buildings). For the first time in four quarters Metro Vancouver’s office vacancy rate experienced an increase, growing 30 basis points (bps) quarter-over-quarter to 6.6%. Suburban markets continue to drive change, though through Q3 2022, new to market subleases from tenants no longer requiring the full extent of their space applied upwards pressure on vacancy rates and accounted for all negative net absorption through the region. ,

[jollyburger]

CBRE: “We have added over 350,000 square feet of sublease product to the market since the start of September, with 50 per cent of that product coming from three occupiers. We now have more sublease space on the market and a higher vacancy rate than during the pandemic, with the potential for more subleases to come,” Kiselbach said. “We expect an increase in the vacancy rate over the next several quarters before reversing course.”

https://biv.com/article/2022/11/metro-vancouver-real-estate-holds-its-ground-despite-challenges

[whatnext]

Originally Posted by Changing City

That's odd, because the Colliers Office Market report for Q3 2022 says The Greater Vancouver Area office market continued to see net positive uptake of space and limited new supply in Q3, which restrained the growth in net absorption. The office vacancy rate remained relatively stable increasing to 5.9% from 5.8% last quarter.

CBRE found a slight increase, but only 0.3% to 6.6% (and slightly lower vacancy in class AAA office buildings). For the first time in four quarters Metro Vancouver’s office vacancy rate experienced an increase, growing 30 basis points (bps) quarter-over-quarter to 6.6%. Suburban markets continue to drive change, though through Q3 2022, new to market subleases from tenants no longer requiring the full extent of their space applied upwards pressure on vacancy rates and accounted for all negative net absorption through the region. ,

Well of course the Globe & Mail is just some tabloid rag. It might be tough on a DTES budget but you should try to swing a subscription. Far be it from me to question the veracity of a real estate firm promoting the product it peddles.

[chowhou]

Originally Posted by whatnext

Well of course the Globe & Mail is just some tabloid rag. It might be tough on a DTES budget but you should try to swing a subscription. Far be it from me to question the veracity of a real estate firm promoting the product it peddles.

You know the Globe & Mail is quoting numbers from another real estate firm right?

[GenWhy?]

Higher vacancies in lower tier offices is great for the Metro. 3% for the longest time was just bonkers and really bad and really expensive

[Changing City]

Originally Posted by whatnext

Well of course the Globe & Mail is just some tabloid rag. It might be tough on a DTES budget but you should try to swing a subscription. Far be it from me to question the veracity of a real estate firm promoting the product it peddles.

You believe it's better because you paid for it? Check out the actual Altus Group data. Their number is higher because they report availability rates, not vacancy rates (which is what every other real estate research business reports). And they show the availability rate in Vancouver in Q3 2021 was at 9.4%, and in Q3 2022 at 9.7%, so there's been a very small increase over the past year, (and exactly in line with the 0.3% increase in the vacancy rate that CBRE reported). That's partly because a number of new buildings were completed here, not all fully leased at the time.

Altus's numbers show Vancouver still has the lowest availability rate of any Canadian city (tied with Quebec), and the highest number of office buildings under construction, with the lowest proportion of the space still available in those buildings. Sounds pretty healthy and definitely not 'escalating quickly'. You might want to save your money; I'll report here if the situation looks dire.

[jollyburger]

I wonder how they settled on 40-60%

The federal government will require public servants to work at least two to three days a week in person, or between 40 to 60 per cent of their regular schedule, in the spring.

At a news conference Thursday afternoon, Mona Fortier, president of the Treasury Board, said the change was to create a common approach to remote work for the federal public service.

"In-person work better supports collaboration, team spirit, innovation and a culture of belonging," she said.

"We've now seen that there needs to be greater fairness and equity across our workplaces and we need consistency in how hybrid work is applied across the federal government."

The one-size-fits-all hybrid model will come into full effect March 31.

https://www.cbc.ca/news/canada/ottawa/hybrid-model-federal-government-1.6687390

[chowhou]

Originally Posted by jollyburger

RIP work from home

The company I work for has been aiming for 2 days a week for months now. I kind of like it, honestly.

[SFUVancouver]

My company shifted to a 'two days per week in the office' target after Labour Day. Management has repeatedly emphasized that this is a target, there is no monitoring system, and they acknowledge that it might not be feasible each and every week. Furthermore, all meetings remain hybrid and they emphasize that if you're unwell enough to not go into the office, then you're unwell enough to not be working from home, either.

From my perspective, and my closer circle of colleagues, it's been working well and management has followed through on their commitments. While I personally have been going into the office generally 4-5 days a week, I have colleagues who follow the 2 days per week in the office guideline.

[FarmerHaight]

Originally Posted by jollyburger

I wonder how they settled on 40-60%

I work across from Douglas Jung and not a soul has worked in that building for almost two years.

[jollyburger]

I wonder if Aritzia needs more space or is moving?

411 Railway Street Gastown/Railtown Aritzia 88,442 New Lease

It was around 112K square feet so they are taking most of it. Ground floor to the 4th floor manufacturing space was 85,788 sq.

RBC expansion at 745 Thurlow

745 Thurlow Street Downtown Core RBC Dominion Securities 57,221 Renewal/Expansion

Colliers moving offices?

1066 West Hastings Street Downtown Core Colliers International 47,084 New Lease
1067 West Cordova Street Downtown Core Colliers International 31,000 New Lease

https://www.cushmanwakefield.com/en/canada/insights/canada-marketbeats/vancouver-marketbeats

[Changing City]

Originally Posted by jollyburger

I wonder if Aritzia needs more space or is moving?



It was around 112K square feet so they are taking most of it. Ground floor to the 4th floor manufacturing space was 85,788 sq ft

Aritzia have had their HQ in 411 Alexander for over a decade. I wonder if they had other office space which they are now consolidating into the same location? It's possible the new Railtown zoning, which is more flexible about office space might be a factor, but I would have expected their business licence to be for manufacturing anyway, and so not an issue.

[jollyburger]

Originally Posted by Changing City

Aritzia have had their HQ in 411 Alexander for over a decade. I wonder if they had other office space which they are now consolidating into the same location? It's possible the new Railtown zoning, which is more flexible about office space might be a factor, but I would have expected their business licence to be for manufacturing anyway, and so not an issue.

A CoV report said they had the second floor at 411 Alexander with some manufacturing in the basement.

https://council.vancouver.ca/20170411/documents/phea2presentation.pdf

They bought Reining Champ which seems to be based out of 2772 Natal St. Maybe they are moving them closer?

[madog222]

Aritzia is based in 611 Alexander and recently leased in the newly built 411 Railway.

411 Alexander doesn't exist.