Office Market Discussion

[Vin]

Originally Posted by LeftCoaster

I think it's safe to say the office component of Gilmore place has broken ground, and it is actually U/C I believe.

Yes, with more office workers being here in the future, Brentwood neighbourhood is definitely turning into the food-and-beverage, as well as entertainment destination in the Lower Mainland, and not just a quiet bedroom community.

[Migrant_Coconut]

The mall and SkyTrain are busy, but across the street, it's barely more active than Chilco or Comox. It'll take more than a few hundred office workers to energize the neighbourhood itself.

[chowhou]

Originally Posted by Migrant_Coconut

The mall and SkyTrain are busy, but across the street, it's barely more active than Chilco or Comox. It'll take more than a few hundred office workers to energize the neighbourhood itself.

Minor disagreement, Solo District with its office space is pretty lively.

[GenWhy?]

Originally Posted by chowhou

Minor disagreement, Solo District with its office space is pretty lively.

I think Migrant was more-so referring to the comment, "turning into the food-and-beverage, as well as entertainment destination in the Lower Mainland".

Gilmore's offices are definitely going to get it into the Broadway and Cambie category. Lots of good LOCAL foot traffic.

[Migrant_Coconut]

Yup. Brentwood the mall is pulling in much of north Burnaby, but it's not exactly an "it" destination for the whole metro... and Brentwood the community is still pretty dead. Foot traffic is nice. Community amenities would be even better.

Originally Posted by chowhou

Minor disagreement, Solo District with its office space is pretty lively.

I'll take a look next time - what I do know is that the north side of Lougheed is pretty empty despite all the residences.

[logan5]

Originally Posted by Vin

Yes, with more office workers being here in the future, Brentwood neighbourhood is definitely turning into the food-and-beverage, as well as entertainment destination in the Lower Mainland, and not just a quiet bedroom community.

Let the good times roll at Earls and Cactus Club.

[Migrant_Coconut]

Cazba's pretty good, but they close at 6-7. And virtually nobody's going halfway across the city to get ramen, tacos or a Japadog.

[jollyburger]

Burnaby’s vacancy decreased at the end of March 2023. A major factor of this movement was the removal of 3700 Gilmore Way from the market as Electronics Arts is
planning to redevelop the site.

https://www.avisonyoung.ca/documents/957...f-805e-8048-fd2d2e2fd6c2?t=1680540255691

[Klazu]

EA is planning to develop a third new building in the area??? I wonder how the layoffs last week are going to impact EAC and their office space needs.

[madog222]

They also have the former MEC office on Great Northern Way to move into.

[Changing City]

Originally Posted by madog222

They also have the former MEC office on Great Northern Way to move into.

They were supposed to start moving in there about a year ago. I haven't noticed if the building is currently in use, or whether they've delayed the move.

[jollyburger]

Just came across the terms of their deal

01 THE OPPORTUNITY
Electronic Arts (EA) is widely recognized as one of Vancouver’s leading video game developers with over 1,300 employees operating out of the world’s largest game test facility located in Burnaby BC. Vancouver is EA’s largest and oldest studio with roots dating back to 1983. Recently EA had outgrown its Burnaby campus and secured a build to suit facility adjacent the EA HQ in Burnaby through its previous advisor JLL. Delays with this to-be-built facility and lack of a back-up solution resulted in an immediate need for 50,000 sf in late 2020. The team was hired in early 2021 to replace JLL and assist with a solution for this immediate premises need. The team acted quickly to assist EA with their premises needs assessment and market review; and then introduced a higher-level view toward real estate that would position EA for being able to better accommodate their office premises and overall workplace needs both now and going forward. This assessment resulted in a new vision for EA which included an expanded geographic view to consider the city of Vancouver and the advantages that Vancouver offered: high speed transit access (not currently available at the Burnaby HQ), access to nearby amenities for staff (not currently available at the Burnaby HQ), leading edge facilities, access to talent, access to educational institutions (not readily available at the Burnaby HQ).
02 OUR APPROACH
After completing the needs analysis and visioning for the Burnaby expansion, the team acted quickly to develop a shortlist that included existing properties across a wide variety of locations and building types. With vacancy under 5% and an extremely limited pool of properties that could accommodate 100,000 sf, C&W used its market intelligence and developer/landlord relationships to unearth a wide variety of solutions that were not known to the market. Given the landlords’ desire for the notoriety of winning the EA business, the team ran a visible RFP process that drew in a number of unique proposals and creative solutions for EA. All proposals attended to the stringent requirements established with the team to provide lease flexibility, EA’s sustainability standards, expansion rights, aggressive financial structure, EA’s technical requirements for redundant power, high speed redundant data, building amenities, building security and air quality metrics.
03 THE RESULT
PCI/Low tide quickly emerged as a front runner for the new EA facility with its recently vacated mass timber building (1077 Great Northern Way) located in the false creek flats submarket in Vancouver’s downtown core periphery. The team’s location analysis pointed to a number key drivers important to EA: access to high-speed transit, access to education (Emily Carr University of Art and Design, The Centre for Digital Media, Langara Digital Arts School) and a growing talent pool living in the Mount Pleasant/Cambie/Main submarket. The building itself satisfied many of EA’s key metrics for this new “HQ2” vision. Built using mass timber construction and a leading-edge sustainability rating that exceeds LEED platinum and is 70% more efficient than a conventional office building. In addition, the building’s access to fresh air, outdoor patios and amenities such as a climbing wall and abundant secure bike parking with shower facilities were an important factor in meeting EA’s new health and wellness initiatives as well as a leading-edge environment in which to attract and retain talent. From a financial perspective, The team leveraged their RFP process to drive below market lease terms in a competitive bid situation; and introduced a unique deal structure that provided a significant (18 month) up front gross rental savings to EA while still securing a short term (5 year) commitment thus allowing for initial rent relief to accommodate a staged possession combined with future lease term flexibility. In addition, the team developed long range plan for this location by securing a Right of First refusal on an adjacent site owned by PCI/Low tide which can accommodate 400,000 sf of office space in a planned build to suit office facility.

https://www.cushmanwakefield.com/en/canada/stories/2022/12/electronic-arts

Storeys said they were moving in the New Year (2023) in a Dec 2022 article

https://storeys.com/low-tide-properties-chip-wilson-lab-29-innovation-district-vancouver/

They were optimizing their real estate portfolio as well with the layoffs. (" approximately $45 million to $55 million associated with office space reductions")

In their recent quarterly

As of December 31, 2022, we have entered into an office lease that has not yet commenced with aggregate future lease payments of approximately $98 million. This lease is expected to
commence in fiscal year 2024, and will have a lease term of 12 years.

I wonder if they have any other new office projects coming online around the world.

[madog222]

Originally Posted by Changing City

They were supposed to start moving in there about a year ago. I haven't noticed if the building is currently in use, or whether they've delayed the move.

There is a contractor team actively, though slowly, working inside. No sign of EA moving in yet.

[fredinno]

Originally Posted by Migrant_Coconut

Yup. Brentwood the mall is pulling in much of north Burnaby, but it's not exactly an "it" destination for the whole metro... and Brentwood the community is still pretty dead. Foot traffic is nice. Community amenities would be even better.



I'll take a look next time - what I do know is that the north side of Lougheed is pretty empty despite all the residences.

It's also way too young to have developed much of a 'community' yet.

Still looks promising, though.

[whatnext]

From the G&M today:

…. In Vancouver, Slack’s WORK-N +0.09%increase
office space is up for sublet after the messaging app service was acquired by Salesforce. Established tech companies Microsoft MSFT-Q -0.26%decrease
and SAP SE also put space up for sublease late last year. SAP, one of the world’s largest software companies, has been adapting to its hybrid work force by reconfiguring its offices and drastically reducing its space in cities such as Montreal and Vancouver.

“In some of our offices, such as Vancouver, this may include not requiring as much space,” Cindy Fagen, managing director of SAP Labs Canada, said in an e-mailed statement.

The B.C. city’s downtown office vacancy rate reached 14.8 per cent at the end of March, more than triple the 4.1 per cent before the pandemic…..

https://www.theglobeandmail.com/business/article-canada-office-vacancy-rate/

[jollyburger]

I guess they moved in with Salesforce? They moved into floors 4-5 at Bentall 5 and both are up for sublease until 2030

https://www.cbre.ca/properties/office/de...treet-vancouver-british-columbia-v6c-2b5

[Changing City]

Originally Posted by whatnext

The B.C. city’s downtown office vacancy rate reached 14.8 per cent at the end of March, more than triple the 4.1 per cent before the pandemic…..[/I]

https://www.theglobeandmail.com/business/article-canada-office-vacancy-rate/

Do they say whose numbers they're quoting? Colliers Q1 2023 data says the Downtown Vacancy rate was 8.4%. The 'availability rate' which includes sublease space was obviously higher, but was 10.9% in the Downtown core.

Vacancy is up compared to the end of 2022, but almost all because of the new buildings that were completed. "Kicking off 2023, the Greater Vancouver Area (GVA) office market saw the highest quarterly net absorption seen in over twenty years with 1.2 million square feet, and also the largest amount of new office space delivered in seven years with over 1.7 million square feet."

[jollyburger]

KinSett Capital CEO on LinkedIn

Misleading data to pile on the false narrative of failing downtown’s. Her quoted “Vacancy Rate”, is actually “Availability Rate”, combining current vacancy with expected vacancy from new construction and announced moves over the next several years. It is used by leasing brokers as potential inventory they can offer clients and will always be more than actual vacancy. The real world is “Current Vacancy” which for Toronto Core today is 11.6%.

[fredinno]

Originally Posted by jollyburger

KinSett Capital CEO on LinkedIn

Still. It will likely have an impact on later office developments- you may have to move places like Mt. Pleasant or False Creek Flats or Granville St. to allow rental/industrial (well, not industrial for Granville St.) instead of office/industrial spaces only for increased density.

The Broadway Plan was made pre-COVID, so there's an excess amount of office density zoned in that may no longer be needed.

[Changing City]

Originally Posted by fredinno

Still. It will likely have an impact on later office developments- you may have to move places like Mt. Pleasant or False Creek Flats or Granville St. to allow rental/industrial (well, not industrial for Granville St.) instead of office/industrial spaces only for increased density.

The Broadway Plan was made pre-COVID, so there's an excess amount of office density zoned in that may no longer be needed.

All the Mount Pleasant and False Creek Flats zoning allows industrial already. In fact, it's required. The office space is on top of industrial space. Introducing residential (rental or strata) wrecks the land values, making it impossible to develop much else, and pushes taxes up by raising land values. It was briefly allowed in Mount Pleasant 20 years ago, and quickly removed again.

It's unclear how much, if at all, Covid and increased Working from Home has impacted demand for office space. In the US the trend is distictly 'back to the workplace'. "The percentage of workplaces with a portion of employees working from home has fallen from 29.8% in 2021 to 16.4% in 2022. The work-from-home bubble has not completely burst, however, as 11.1% of employers had all of their employees working from home in 2022, which is slightly up from 10.3% in 2021." [Gizmodo, quoting the US the Bureau of Labor Statistics].

AbCellera and Nature's Path commited to their large developments since Covid. At least two more projects are soon to start construction in Mount Pleasant. Amazon continued to occupy over a miilion square feet of new space in The Post, and require employees to be be at the office at least three days a week.

New applications for office buildings, or office + industrial, have continued to be proposed in Mount Pleasdant, and on The Flats, and Downtown, and in Burnaby and Surrey and Richmond, so it doesn't look like the market expects any slowdown to last too long, at least, not at the moment.