Office Market Discussion

[fredinno]

Originally Posted by Changing City

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.

I know they require industrial.

It's very strange, everything but offices are still in very low vacancy mode.


The reason they allowed the rental apartments at Scott Road was because it would still allow industrial uses around that area without raising land prices too much.

Broadway allows rental blocks above industrial lots- though this is incredibly rare to see overall.


The Burrard Slopes area already has a lot of its industrial lots be apartment blocks, resulting in highly fragmented industrial lots.
You effectively have to 'downzone' apartment blocks to ground-floor industrial to meet the zoning requirements.
So having rental be compatible with industrial ground-floor would be a huge boost to intensifying industrial in this area.

It was briefly allowed in Mount Pleasant 20 years ago, and quickly removed again.

I would like to know a source for this.

[Changing City]

Originally Posted by fredinno

I know they require industrial.

It's very strange, everything but offices are still in very low vacancy mode.

The reason they allowed the rental apartments at Scott Road was because it would still allow industrial uses around that area without raising land prices too much.

Broadway allows rental blocks above industrial lots- though this is incredibly rare to see overall.

The Burrard Slopes area already has a lot of its industrial lots be apartment blocks, resulting in highly fragmented industrial lots.
You effectively have to 'downzone' apartment blocks to ground-floor industrial to meet the zoning requirements.
So having rental be compatible with industrial ground-floor would be a huge boost to intensifying industrial in this area.

I would like to know a source for this.

None of the industrial or residential debate is about the office market, so I'm not discussing it here any further. Offices are still in reasonably low vacancy rates too. Around 4 to 8% is considered healthy. We still have the lowest vacancy rates of any major Canadian city.

Broadway doesn't allow most industrial uses below residential. Car dealerships are an exception, which can have service bays, but not body repair or paint spraying.

Check the Zoning Schedule for Mount Pleasant industrial (I-1). It only allows residential as artist live/work in older buildings (built before 2013, when residential was removed). I didn't mention Burrard Slopes, but a similar change was made there. New residential buildings are no longer permitted in I-C either. There are very few residential buildings in the Burrard Slopes I-C area, built up to the 2010s. Most new projects have been built in the C3-A area that used to have industrial zoning in the 1990s, but not for many years.

[jollyburger]

Notable office transactions for Q1 2023

Weta Digital 745 Thurlow Street Downtown Core Sublease 31,868
Thinkific 369 Terminal Avenue False Creek Flats Headlease - Renewal 20,802
Regus / IWG 701 Georgia Street West Downtown Core Headlease - Renewal 13,486

https://www.collierscanada.com/en-ca/research/vancouver-office-market-report-2023-q1

[madog222]

^ and from Cushman & Wakefield

MNP - 609 Granville - 100k - headlease
Fluor Canada - The Stack - 88k - headlease
2930 Virtual Way (apparently in Burnaby ) - AMD - 28k - sublease

30% at Bosa Waterfront and 18% at The Stack remains available.

https://cw-gbl-gws-prod.azureedge.net/-/...pdf?rev=00e41fbc58634a778b443152d9007474

[jollyburger]

One notable example is Slack which is shutting down their Vancouver office and adopting a hybrid work model.

I guess they aren't moving in with Salesforce.

[officedweller]

Wait, so MNP left MNP Tower for the former Canaccord Tower?

[madog222]

Yeah, that struck me as odd.

[jollyburger]

Originally Posted by officedweller

Wait, so MNP left MNP Tower for the former Canaccord Tower?

It seems like they only had 56,000 sq feet at MNP tower and they are doubling their space? There's only one empty floor (24) at MNP to expand.

MNP moved into the stunning MNP Tower, where we occupy floors 16 - 23

https://www.mnp.ca/en/offices/vancouver

They bought out Bowra which you assume will consolidate in the space. Though they only seem to have 3,459 square feet at 505 Burrard and becomes available Jan 2024.

https://www.spacelist.ca/listings/bc/vancouver/505_burrard_st#799177

[Changing City]

Originally Posted by officedweller

Wait, so MNP left MNP Tower for the former Canaccord Tower?

It doesn't appear that they've left 1021 WHastings, so maybe they're expanding into the Canaccord space as well? They added BBA Accounting staff and principals recently, (as well as Bowra) so they're obviously growing the business.

[jollyburger]

The report mentioned that they are relocating FWIW. Assume they need to renovate the Canaccord space? Canaccord still has their old Granville address on their website.

[FarmerHaight]

Originally Posted by Changing City

It doesn't appear that they've left 1021 WHastings, so maybe they're expanding into the Canaccord space as well? They added BBA Accounting staff and principals recently, (as well as Bowra) so they're obviously growing the business.

MNP is completely vacating 1021 eventually. Some service lines may move as early as this year but the whole firm likely won't be moved until late 2024 or 2025. The floorplates have been too small leading to teams being spread out over two or three floors rather than being consolidated on one. And since MNP has eight floors in the tower, the firm is paying for a lot of elevator lobby and washroom square footage.

[Klazu]

Yeah, small floorplates can be problematic for office towers. I wonder how Microsoft will do with 20 floors on Bentall 6...

Curious to also know who will get the naming rights after MNP moves out. With the new council in place, maybe there will even be a sign go up?

[Changing City]

Originally Posted by Klazu

Yeah, small floorplates can be problematic for office towers. I wonder how Microsoft will do with 20 floors on Bentall 6...

Curious to also know who will get the naming rights after MNP moves out. With the new council in place, maybe there will even be a sign go up?

B6 floorplates are on average twice the size of MNP Tower floorplates, and similar to many other office towers in the city, so Microsoft should manage. MNP chose not to add signage - policy already allows it and Council aren't involved one way or another. Oxford also developed The Stack where the EY sign went up, so assuming the MNP tower was designed to take a sign and a tenant wants to pay for the naming rights, then presumably one could be added.

[FarmerHaight]

Originally Posted by Klazu

Yeah, small floorplates can be problematic for office towers. I wonder how Microsoft will do with 20 floors on Bentall 6...

Curious to also know who will get the naming rights after MNP moves out. With the new council in place, maybe there will even be a sign go up?

Smaller floorplates are likely not a problem for smaller companies. MNP Tower would work fine if a company had multiple 2 to 5 person divisions (e.g., accounting, marketing, HR) but MNP's Vancouver team is 200 - 300 strong, is already split over two properties (an acquiree's office space on W Georgia was retained) and can't all fit in MNP Tower.

[LeftCoaster]

Originally Posted by Changing City

B6 floorplates are on average twice the size of MNP Tower floorplates, and similar to many other office towers in the city, so Microsoft should manage. MNP chose not to add signage - policy already allows it and Council aren't involved one way or another. Oxford also developed The Stack where the EY sign went up, so assuming the MNP tower was designed to take a sign and a tenant wants to pay for the naming rights, then presumably one could be added.

Oxford nor the architect likely wouldn't want signage on a nice architecturally sculpted crown like that.

Crown signage looks great on boxy towers but can detract from a well designed crown if not executed well, so I doubt you'll see anything on the old MNP tower anytime soon.

On their new premises though...

[Changing City]

Originally Posted by LeftCoaster

Oxford nor the architect likely wouldn't want signage on a nice architecturally sculpted crown like that.

Crown signage looks great on boxy towers but can detract from a well designed crown if not executed well, so I doubt you'll see anything on the old MNP tower anytime soon.

On their new premises though...

Thanks. I hadn't considered that owners would give up income for aesthetics; that's good to know!

[C3YVR]

Last week I linked how bad SF retail was after Nordstrom announced its exit, this week it's office space. SF currently has 31% space available:
Downtown S.F. has 18.4 million square feet of empty office space. We mapped every vacancy

https://www.sfchronicle.com/sf/article/downtown-empty-offices-business-tech-17911258.php

[LeftCoaster]

Originally Posted by Changing City

Thanks. I hadn't considered that owners would give up income for aesthetics; that's good to know!

Certainly not widespread but some of the owners with longer term outlooks would rather keep their trophy asset free of clutter if that is how the building was designed, rather than chase some short term payment or leasing incentive.

I will begrudgingly admit Oxford is one of those owners.

[officedweller]

Originally Posted by LeftCoaster

Certainly not widespread but some of the owners with longer term outlooks would rather keep their trophy asset free of clutter if that is how the building was designed, rather than chase some short term payment or leasing incentive.

I will begrudgingly admit Oxford is one of those owners.

Well, logos appeared on the iconic Commerce Court tower in Toronto after many, many years without,
and there's also a logo on at least one of the Toronto-Dominion Centre towers in Toronto, too (one of the non-designated ones).

From 2015:
New TD Centre signage reflects a time when brands trump architectural vision
https://www.theglobeandmail.com/life/hom...mp-architectural-vision/article25253309/

[C3YVR]

Very interesting article in today's NYT on the future of the office and the potential of the Playground City. If Vancouver is not a great candidate for this type of future city I'm not sure there are that many other cities better suited.

26 Empire State Buildings Could Fit Into New York’s Empty Office Space. That’s a Sign.

https://www.nytimes.com/interactive/2023/05/10/opinion/nyc-office-vacancy-playground-city.html