Office Market Discussion

[s211]

Originally Posted by whatnext

Not surprisingly Facebook floated that. Could they get any slimier?

Interesting article on how few are returning to Manhattan offices, even as they reopen:

...Since the lockdown began in March, financial firms have eschewed their option as essential businesses to bring more staff into their offices. Hopes that the city’s phased reopening would inspire a quick rebound of the bustling economy are running into the realities that big companies are going to be cautious. In a recent workplace survey of 60 companies conducted by the Partnership for New York City, employers said they only anticipate having 10% of employees back by Aug. 15. By year-end, they expect just 30%.

Many firms have been pleasantly surprised at employees’ ability to work remotely and some want to avoid putting a strain on public transit with workers who don’t have to be in the office. Companies are also taking time to retrofit spaces for social distancing, or upgrade air-conditioning systems and bathroom hand dryers. Employers including BlackRock Inc. plan to require mandatory training for staff returning to offices...

...The delay in returning workers to offices may augur a more permanent reckoning for New York office space. In a survey, the Partnership for New York City and Newmark Knight Frank found that roughly 37% of finance companies said they plan to decrease the space they occupy in the city by 20% or more. About one-fifth of professional services firms said the same. And more than a quarter of financial services companies plan to relocate jobs to the suburbs or other locations, the highest share of any industry...

https://www.bloomberg.com/news/artic...&sref=x4rjnz06

The two top tenant rep brokers for Manhattan were on a webinar earlier today and confirmed the 10% occupancy in the next short while and 25% by year-end if they're lucky. The major constraint isn't corporate policy but employee issues with mass transit.

[Migrant_Coconut]

Originally Posted by scryer

Question to those that still think that work from home models are distant fantasies: so if our governments are looking at the work at home model, what would stop private companies from doing the same?

Let's have a discussion .

Discussion had. AFAIK, hardly anybody's been naysaying "5-10% decentralization" guesses; everybody's doing it right now, and some of it might stick around long-term; maybe it jumps to 15-30%, maybe Casual Friday becomes WFH Friday.

It's a gigantic leap from those guesses to the 70-95% some posters are hoping for. Too many inefficiencies, for one thing.

[whatnext]

Some numbers from today:

Office rents in Toronto and Vancouver fell in the second quarter amid an increase in vacancies and subletting as the coronavirus put the brakes on a multi-year run of tightening supply, says commercial real estate services and investment firm CBRE.

“We are witnessing the beginning of a shift in momentum,” CBRE managing director Jon Ramscar said Wednesday after the firm reported a drop in office rents in downtown Toronto of $1.53 per square foot to $35.38 while the office vacancy rose to 2.7 per cent from a record low 2 per cent in the first three months of the year.

“It remains early in the trajectory of the virus to forecast its impact on vacancy and rental rates, with some markets still on lockdown, but it is clear tenants will likely have more opportunity to take advantage of longer decision-making timelines,” he said.

Toronto had 650,000 sq. ft. of vacant office space available for sublet, an 86 per cent increase from the first quarter, said the CBRE Quarterly Statistics Report on office and industrial real estate in major Canadian markets.

The downtown office vacancy rate in Vancouver rose to 3.3 per cent from 2.2 per cent a quarter earlier, with the amount of sublet space in downtown Vancouver up 200 per cent even as 219,000 sq. ft. of net new space was put on the market in the quarter. Downtown Class A office rents in Vancouver fell by $1.62 to $44.62 per sq. ft....

https://www.thestar.com/business/202...=&utm_content=

[jollyburger]

Sublease market spike

A “shock wave” increase in sublease space has nearly doubled the vacancy rate in downtown Vancouver office towers, according to a new survey by CBRE.

The commercial agency reports that the number of subleases has increased from 37 at the end of 2019 to 90 this month, representing more than 500,000 square feet of space, as a direct result of the pandemic.

“The first real shock waves to hit the market were delivered via the downtown Vancouver sublease market. Uncertainty pushed some tenants to withhold from moving forward with leasing contracts, with some refusing to take occupancy. This has resulted in a proliferation of subleasing activity,” the June 15 report stated.

Downtown Vancouver has about 24 million square feet of office space and the subleases have pushed the vacancy rate to 4%, up from 2.2.% at the start of the year.

But CBRE notes that Vancouver still has one of the lowest office vacancy rates in North America. Only six of the available subleases pushed back onto the downtown market are bigger than 10,000 square feet and only five are greater than 20,000 square feet.

“With current low vacancy rates, coupled with the long lead time before the new office buildings under construction are complete, we expect a minimal negative short-term impact on office rental rates,” CBRE noted. “While some smaller users may benefit from potentially lower rental rates in short-term sublease space, the integrity of the overall market is expected to remain very stable.”

About 3.9 million square feet of new office space is under construction in Metro Vancouver, but two-thirds of that space is pre-leased, the study noted.

The agency’s most conservative estimate is that the Vancouver office vacancy rate may reach 7% by 2024, still below what it considers a “balanced” market.

https://biv.com/article/2020/06/subl...ikes-vancouver

[rofina]

Originally Posted by jollyburger

Sublease market spike



https://biv.com/article/2020/06/subl...ikes-vancouver

This is not a bad thing.

Our vacancies were actually very unhealthy. Tenants were frozen in place due to no temp space available, no expansion space. It was slowing deals more than anything.

Obviously we don't want Calgary levels, but if we return to 6% it would be a good thing for all.

[Migrant_Coconut]

Just three months ago, people were panicking about how the vacancy rate was 1.7% and how we wouldn't have office space and how we'd scare away businesses... now we're panicking because of the opposite?

[jollyburger]

Originally Posted by Migrant_Coconut

Just three months ago, people were panicking about how the vacancy rate was 1.7% and how we wouldn't have office space and how we'd scare away businesses... now we're panicking because of the opposite?

I mean what do you define as panicking?

The agency’s most conservative estimate is that the Vancouver office vacancy rate may reach 7% by 2024, still below what it considers a “balanced” market.

[C3YVR]

CBRE 2020 Tech Talent report is out, and again Vancouver posts some impressive numbers. Next years report will really show where Vancouver is headed. https://www.cbre.us/research-and-rep...h-America-2020

[officedweller]

Check out the sublease offerings here:

https://www.collierscanada.com/en-CA...wn%20Vancouver

Check out what a conventional office tower floor (19th) at 401 West Georgia looks like when they rip out all the leasehold imrpovements and try to make it look "tech":

https://www.collierscanada.com/en-CA...ada/CAN2003900

Mobify at 725 Granville (4th floor above Nordstrom) is for sublease:

https://www.collierscanada.com/en-CA...ada/CAN2005055

[Marshal]

The last two are indicative of a lot of recent tower renos and shared office spaces. I sometimes use meeting rooms of one in the Royal Centre and it shares the exact same features list.

[s211]

Originally Posted by officedweller

Check out the sublease offerings here:

https://www.collierscanada.com/en-CA...wn%20Vancouver

Check out what a conventional office tower floor (19th) at 401 West Georgia looks like when they rip out all the leasehold imrpovements and try to make it look "tech":

https://www.collierscanada.com/en-CA...ada/CAN2003900

Mobify at 725 Granville (4th floor above Nordstrom) is for sublease:

https://www.collierscanada.com/en-CA...ada/CAN2005055

Tech was the saviour of the office market in the last cycle and now they're dumping tons of space on the sublease market right across the continent, in their too-early decision to have nearly all their staff permanently work from home.

[officedweller]

A bit old now I guess, but here's Avison Young's Year-End 2019 Office Market Report:

https://www.avisonyoung.com/document...?t=-1993815496


https://www.avisonyoung.com/document...?t=-1993815496


https://www.avisonyoung.com/document...?t=-1993815496

[Changing City]

Originally Posted by officedweller

A bit old now I guess, but here's Avison Young's Year-End 2019 Office Market Report:

And here's the brand new mid-year 2020 report.

"Predictions that the impacts from a global pandemic would fundamentally alter the dynamics of Metro Vancouver’s office market failed to materialize at mid-year 2020 as vacancy in the suburbs reached record lows and downtown Vancouver continued to post one of the tightest office vacancy rates in North America despite an initial wave of sublease vacancy."

[officedweller]

Thanks!

Kabam has leased 15,000 sq ft more at Vancouver Centre II.
Slight increases for DLA Piper and EY at The Stack (floorplate changes?)

https://www.avisonyoung.com/document...6?t=-303633317

CityLink 525 West 8th is 64% leased.
King George Hub Phase B is 84% leased.

https://www.avisonyoung.com/document...6?t=-303633317

[whatnext]

Subscriber article in the G&M on office market:

Companies look to sublease office space in Toronto, Vancouver as big firms move to make home offices more permanent
RACHELLE YOUNGLAI
PUBLISHED SEPTEMBER 7, 2020

PricewaterhouseCoopers, Cisco Systems Inc. and several other major companies are trying to offload some of their office space in Toronto, as the coronavirus pandemic continues to keep large numbers of office workers at home.

Space available for sublease in downtown Toronto nearly tripled to 1.7 million square feet in August from the end of last year, according to data from commercial real estate company Avison Young. That’s higher than the level that followed the global financial crisis of 2008, and it has helped push the office vacancy rate to 3.2 per cent in the downtown core, compared with 2.1 per cent at the beginning of the year. The same is true in downtown Vancouver, where the space available for sublease more than tripled over the same period....

....In downtown Vancouver, the increase in subleases helped send the office vacancy rate to 3.5 per cent from 2.6 per cent, according to Avison. (Sublease space is counted as vacant and is included in the vacancy rate.)

Across the Greater Vancouver area, vacancy rates are up 30 basis points to 4.7 per cent over the same January-August period. Traction on Demand, a tech consulting company, recently put 48,000 square feet on the sublet market. Mobify and Stemcell Technologies Inc. did so earlier in the pandemic...

https://www.theglobeandmail.com/busi...ce-in-toronto/

[jollyburger]

Still going through the document but a Regus/IWG bankruptcy protection in Canada:

29 centres in BC

https://www.ksvadvisory.com/insolven...siness-centers

Regus/Spaces

https://www.prpeak.com/covid-19/pare...ion-1.24197519

[officedweller]

Local Spaces offices:

Gastown
Spaces Green Lamp (Deloitte Summit)
CityLink (West 8th)
Mount Pleasant (GNW Campus)

King George Hub

https://www.spacesworks.com/locations/

[jollyburger]

This is the 20 Regus had on their site. Three more in Victoria. Two in Kelowna.

Robson Square 777 Hornby
HSBC Building
CF Pacific Centre 701 West Georgia
Park Place
Green Lamp 400 West Georgia
MNP Tower
1090 Homer
151 West Hastings
1500 West Georgia
525 West 8th
565 Great Northern Way
Burnaby Centre 4170 Still Creek
Solo District
Metrotower
5811 Cooney
220 Brew Street
King George Hub
King's Cross
15300 Croydon
Langley Business Centre
22420 Dewdney Trunk

The Edmonton space rental terms were quarterly at 80% of the profit for that period.

https://www.ksvadvisory.com/docs/def...rsn=1f3656d5_2

[whatnext]

In today's G&M:

Office vacancies spike in Toronto, Vancouver as pandemic fuels work-from-home migration
RACHELLE YOUNGLAI
PUBLISHED SEPTEMBER 29, 2020

Vacancy rates in Canada’s tightest office markets are spiking, as employees continue to work from home and more businesses try to get rid of space amid the economic fallout from the novel coronavirus pandemic.

Subleases in downtown Toronto more than doubled over the past three months, sending the office vacancy rate to 4.7 per cent in the third quarter, from 2.7 per cent in the second, according to new data from commercial real estate brokerage CBRE.

In downtown Vancouver, sublease space rose 30 per cent, pushing the office vacancy rate to 4.6 per cent, from 3.3 per cent. (Sublease space is included in the overall vacancy rate.)

Vacancy rates climb, rents fall in Canada’s hottest office markets
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Ottawa's offices empty out as federal employees work from home
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That marks the second consecutive quarter of rising vacancies in the country’s most popular office markets, which are now double prepandemic levels. In the early months of the health crisis, a wave of smaller tenants such as Ritual Technologies and CrowdRiff tried to get rid of their office space in downtown Toronto. Over the summer, bigger tenants such as PricewaterhouseCoopers, Cisco Systems Inc. and Oracle Inc. put some of their space up for sublease.

Now, landlords are waiting to see what the largest office tenants decide to do.

“My concern is that there are bigger shoes to drop,” said Paul Morassutti, vice-chair of CBRE Canada. “I would fully expect to see larger blocks come to the market."...

https://www.theglobeandmail.com/busi...ic-fuels-work/

[GenWhy?]

Yup almost at a healthy vacancy - better than the 2019 2% vacancy. Some older stock could use some TLC.