Metro Vancouver Office Report First Quarter Highlights 2008
2% 0%
Economic Overview Although the US still remains in a period of economic slow down, Stats Canada predicts the outlook for BC to remain positive in 2008. BC’s exposure to Asian Markets, strong All Classes A Class B Class C Class Metro Vancouver vacancy rates by class 20% 18% 16% 14% 12% 10% 8% 6% 4% 2%
All Classes
A Class
B Class
C Class
08 Q
1
07 Q
1
06 Q
1
05 Q
1
04 Q
1
03 Q
1
02 Q
Building Class
1
01 Q
1
00
0%
1
Low vacancy rates in the downtown core have also contributed to narrowing the gap between building classes. Lease rates for B Class buildings in the Downtown Core have increased approximately $10 per square foot (psf) to $35 psf from Q7 2007, while A 20% Class only increased $5 psf to $40 psf. 18% Due to 16% lack of supply within the Downtown Core some tenants are looking into other markets to address their relocation or 14% expansion needs. Broadway Corridor and Burnaby are two of the top 12% markets that have seen an increase of interest over the last quarter. 10% Vacancy rates in these two markets have decreased 8% over the last quarter to 2.0% and 2.4% respectively. The expansion of transit infrastructure, as well as increas6% ing amenities and services have continued to encourage the 4%
migration of tenants out of the city’s center and into the rapidly expanding suburban markets.
Q
Market Overview Downtown Vancouver’s office vacancy rates continued to drop in Q1 2008 to 2.8%, a record low for the past 25 years. One of the major factors contributing to this minimal rate continues to be the lack of new office product that has come on the market. In the past 3 years the only new office space to replenish downtown supply has been the 10 floors added to Bentall Five.
Metro Vancouver Office Report First Quarter Highlights 2008 Municipality Vacancy Changes a cap rate of just 1.9%. The new owners, Argo Ventures Inc, and Sun Capital have plans to restore the tower into lofty office space tailored to upscale commercial tenants.
New Wes tmins ter S urrey R ic hmond
Another notable purchase that occurred in Q1 was the Richmond Riverfront Business Park by ASPAC Developments Ltd. This property contains two buildings with a total of 23,000 sq ft and sold for $38,000,000 at $309 psf. This site is currently zoned I3 but is expected to be rezoned to CD, a high density commercial and residential zoning.
North S hore B urnaby B roadway C orridor Downtown C ore Vanc ouver
0%
5%
10%
15%
Q4 2007
20%
Q1 2008
tourism due to the lead up to the 2010 Olympic Games, and export diversity are the major factors which continue to drive our strong economy. BC’s unemployment rate continued to stay below the national average of 5.8% sitting at 4.1%. In March alone, 15,000 new jobs were created, with a significant percentage being trades based for various Olympic projects. BC’s population reached 4,414,000 over the quarter, and continued growth is expected at 1.5% over the next 12 months. Metro Vancouver’s CPI increased 1.3% over the past 12 months, slightly higher than BC’s CPI of 1.1%. The provinces’ GDP has also grown over the past year, reaching a current growth rate of 6.4%.
Looking Ahead Despite the bleak outlook for the economy of the US, BC’s resource driven economy continues to thrive. The ramp up to the 2010 Olympic Games, another factor strengthening our economy, continues to create a strong job market led by the numerous construction projects currently underway and proposed. The Gateway Transportation Projects underway in Metro Vancouver will also provide more feasible and positive alternatives to working outside the Downtown Core for many tenants. Large transit stations in Metro Vancouver’s suburban and outlying areas are creating small hubs of commercial activity attracting both office users and retailers. Areas around transit stations benefit immensely from a high pedestrian traffic and quick access to rapid transit. Expect future development and interest in environmentally sustainable, and energy efficient office buildings. L.E.E.D. standard certified buildings are initially expensive to build, but with escalating energy costs these buildings will become increasingly attractive, providing substantial savings to tenants
Market Activity Vancouver’s Historical Sun Tower, located at 100 West Pender Street, sold for $15,470,000. With a total of 79,368 square feet (sq ft), the price was approximately $195 psf, at
Major office sales of Q1 2008 Address
Municipality
6300 River Road - Richmond Riverfront Business Park
Richmond
100 West Pender - Sun Tower
Vancouver Downtown
147 West 16th Street
North Vancouver
Price
Size (sq ft)
Price (sq ft)
Purchaser
$38,000,000
123,000
$309
ASPAC Developments Ltd.
$15,470,000
67,025
$231
Sun Tower Holdings Corp.
$3,150,000
6,313
$499
Caliber Holdings Ltd.
Major lease transactions of Q1 2008
100 West Pender Street Sold: $15.47 Million
Address
Municipality
Tenant
811 Cambie Street
Vancouver Downtown
Next Level Games
24,500
Head-Lease
1110 Hamilton Street
Vancouver Downtown
Electronic Arts
22,000
Head-Lease
550 Burrard Street - Bentall IV
Vancouver Downtown
Meyers Norris Penny LLP
16,400
Head-Lease
Metro Vancouver Office Report First Quarter 2008
02
Size (sq ft)
Lease type
Metro Vancouver Office Report First Quarter Highlights 2008 and owners in future operating and utility costs. Early adopters to this trend include Government and Institutional users, environmentally motivated organizations, and large corporations with deep pockets.
Q1 2008 Total Metro Vancouver
Looking ahead in 2008 we predict that vacancy and office availability will remain at record low rates. Downtown Core office space will likely remain very limited with new product not coming onto the market until 2009.
Number of buildings
Total office area (sq ft )
Total vacant office area
Vacancy (%)
Average operating Est. avg. asking costs/sq ft lease rate/sq ft
551
39,354,999
1,645,039
4.18%
$11.25
$20.50
Class A
162
19,944,887
504,606
2.53%
$13.50
$25.75
Class B
233
14,325,862
489,944
3.42%
$11.50
$20.00
Class C
156
5,084,250
419,451
8.25%
$9.00
$15.75
134
18,272,242
279,565
1.53%
$14.00
$35.00
Class A
34
9,916,835
77,351
0.78%
$18.00
$40.00
Class B
51
6,060,819
112,731
1.86%
$15.00
$35.00
Downtown Core
Class C Broadway Corridor
49
2,294,588
86,276
3.76%
$10.00
$30.00
100
4,236,850
103,379
2.44%
$11.50
$20.00
Class A
31
2,131,647
62,670
2.94%
$13.00
$27.00
Class B
40
1,515,454
57,132
3.77%
$12.00
$19.00
Class C
29
589,749
41,106
6.97%
$10.00
$13.50
43
2,284,337
184,803
8.09%
$13.00
$18.50
Class A
9
1,360,261
180,370
13.26%
$15.00
$25.00
Class B
25
757,781
47,816
6.31%
$13.00
$18.00
Surrey
9
166,295
29,484
17.73%
$11.00
$12.00
60
2,966,562
388,620
13.10%
$10.50
$14.00
Class A
30
1,836,662
232,889
12.68%
$12.00
$16.00
Class B
23
929,126
85,851
9.24%
$10.00
$14.00
Class C
7
200,774
63,003
31.38%
$9.00
$12.00
40
1,327,069
42,466
3.20%
$12.00
$19.00
Class C Richmond
North Shore Class A
13
652,753
15,797
2.42%
$15.00
$25.00
Class B
19
460,134
18,267
3.97%
$11.00
$20.00
Class C
8
214,182
14,457
6.75%
$8.00
$12.50
33
1,099,371
166,115
15.11%
$12.00
$17.00
Class A
8
424,122
59,547
14.04%
$14.00
$20.00
Class B
17
482,849
30,613
6.34%
$12.00
$14.00
New Westminster
8
192,400
75,901
39.45%
$10.00
$12.00
70
6,054,237
291,814
4.82%
$7.00
$21.00
Class A
34
3,374,195
179,170
5.31%
$6.00
$26.00
Class B
30
2,539,367
91,163
3.59%
$7.50
$21.00
Class C
6
140,675
21,312
15.15%
$7.75
$16.00
$9.50
$20.50
Class C Burnaby
33
1,251,570
46,809
3.74%
Class A
0
0
0
0.00%
$-
$-
Class B
11
611,007
19,247
3.15%
$11.00
$23.00
Class C
21
640,563
27,480
4.29%
$8.00
$18.00
39
1,862,761
85,501
4.59%
$12.00
$21.00
Class A
3
248,412
0
0.00%
$15.00
$27.00
Class B
17
969,325
41,002
3.01%
$12.00
$19.00
Class C
19
645,024
39,669
6.15%
$9.00
$17.00
Gastown
Yaletown
Metro Vancouver Office Report First Quarter 2008
03
Development
Civic address
Current state
Completion Office sq ft Average floor
Floors Sq ft available
Vancouver Cross Roads
505-525 Cambie Street
Under Construction
Q1 2009
80,000
10,000
8
80,000
Broadway Tech - Phase IV & V
2925 Virtual Way
Under Construction
Q4 2009
100,000
TBA
4
100,000
688 Terminal Ave South
688 Terminal Avenue South
Under Construction
Q1 2010
153,300
20,000
7
153,300
Jameson House
848 West Hastings Street
Under Construction
Q1 2010
75,000
10,000
7
75,000
Thurlow Street & Alberni Street
745 Thurlow Street
Proposed
TBA
400,000
18,180
2
TBA
1133 Melville Street
1133 Melville Street
Rezoning
TBA
600,000
TBA
40+
TBA
4300 North Fraser Way
4300 North Fraser Way
Under Construction
Q2 2008
40,000
20,000
2
40,000
Lake City Center
3292 Production Way
Under Construction
Q3 2008
108,966
20,000
6
104,752
Lake City Court II
8081 Lougheed Highway
Under Construction
Q4 2008
70,365
70,365
1
70,365
Discovery Green Building
4200 Canada Way
Under Construction
Q1 2009
155,248
30,000
5
141,115
Commerce @ Citi
4445 Lougheed Highway
Under Construction
Q3 2009
108,000
10,000
11
108,000
Willingdon Park Phase 8/9
4350 & 4370 Still Creek Drive
Under Construction
Q4 2009
185,000
24,387
4
185,000
Metro Park Phase III
4730 Kingsway
Preleasing
Q1 2011
385,000
16,089
27
385,000
Glenlyon Business Park
Big Bend Area
Under Construction
TBA
2,000,000
Varies
Varies
Build to suit
8075 199th Street
Under Construction
Q2 2008
33,570
11,190
3
33,570
505 6th Street
Under Construction
Q2 2008
42,000
14,000
4
42,000
111 Forester Street
Under Construction
Q1 2009
30,000
15,000
2
15,000
BCIT Aerospace Technology Campus
3820 Cessna Drive
Under Construction
Q3 2008
90,647
20,000
5
44,681
Airport Executive Park, Building 6
10851 Shellbridge Way
Under Construction
Q4 2008
63,000
21,000
3
63,000
15844 24th Avenue
15844 24th Avenue
Preleasing
Q3 2009
36,705
TBA
3
36,705
Benchmark Business Centre II
5455 152nd Street
Under Construction
Q4 2009
112,500
37,500
3
112,500
Gateway Office Park
108th Avenue & City Parkway
Under Construction
Q1 2010
635,500
16,500
29
638,500
Burnaby
Langley 8075 199th Street
New Westminster South Westminster Centre
North Vancouver 111 Forester Street
Richmond
Surrey
With a team of over 11,000 property professionals and a system operating across 140 cities in 45 countries, DTZ works with clients to provide innovative real estate, capital markets and business solutions with extensive global reach. DTZ Barnicke offers specialized resources and real estate expertise in dozens of strategic sectors including, but not limited to: logistics and warehousing, manufacturing, data and call centres, lease audit, life sciences, all levels of retail, and hospitality. DTZ Barnicke 800 - 475 West Georgia Street, Vancouver, BC, V6B 4M9 Tel: (604) 684 7117 Fax: (604) 684 1017 www.dtzbarnicke.com VANCOUVER • Toronto • Calgary • Edmonton • Winnipeg • Montreal • Mississauga • Nanaimo • Burlington • Halifax • Kingston • London • Markham • Niagara • Ottawa • Regina • Waterloo • Victoria All information has been obtained from sources considered to be accurate but is not guaranteed and is subject to conditions at the time of any transaction taking place. Properties are submitted subject to prior sale or lease, withdrawal or changes without notice.