Office Market Discussion

[Caliplanner1]

Originally Posted by EastVanMark

As was mentioned by Vancouver councillor Reimer in an article regarding this issue, companies will not move to where the region thinks they should go. They are deciding between opening operations in Vancouver or Calgary, not Vancouver or Coquitlam. The region needs to butt out of such affairs and stop trying to dictate where commercial development growth should take place as a previous poster aptly put it like a "Soviet planned economy."

The reality in economic/planning history is that from time-to-time government input at various levels and in a variety of ways-e.g. via tax breaks, zoning regulations or infrastructure development assistance to the private sector as seen during periods of economic downturn etc.- have effectively served to drive urban/real estate development in the holistic/mutual interest of both the wealthy and the impoverished!

[BodomReaper]

Coquitlam may gripe about not being able to develop into a complete community, but a bedroom community of towers served by rapid transit is still infinitely preferable to a bedroom community of sprawl served by highways.

Even looking at just suburbs, it just doesn't make sense for firms to locate in the north-east when you could be in Burnaby and give your employees better access to Vancouver, the North Shore, Richmond, and the airport while still being within easy reach of the Tri Cities. It only makes sense for local services like doctors' offices etc. to be based there, which is why we'll only see office development in 3-4 storey blocks on tower podiums. But with that smattering of offices, city hall, Douglas College, and thousands of retail jobs, Coquitlam town centre isn't actually doing that badly for a suburb in terms of a live/work balance.

I sincerely hope they don't take the New West approach of dumping a bunch of tax dollars into speculative commercial real estate to solve this non-problem - unlike New West, city council isn't controlled by a bunch of wannabee central planners, and Mayor Stewart especially has a strong grasp of regional land economics. We'll probably be spared despite the whining.

[Sheba]

[WarrenC12]

Originally Posted by Caliplanner1

Does that mean WarrenC12 that "we therefore tend to plan on an individual basis generally for the rich/private sector and not also collectively on behalf of the poor/via government"?????.....just asking!

Residential and Commercial are two different things. There are many options for affordable housing, government assisted or not.

For commercial property, it should be 100% supply and demand, government hands-off for the most part.

[WarrenC12]

Originally Posted by EastVanMark

As was mentioned by Vancouver councillor Reimer in an article regarding this issue, companies will not move to where the region thinks they should go. They are deciding between opening operations in Vancouver or Calgary, not Vancouver or Coquitlam. The region needs to butt out of such affairs and stop trying to dictate where commercial development growth should take place as a previous poster aptly put it like a "Soviet planned economy."

I'm not a big fan of Reimer but that's right on the money. Burnaby is trying to complain about Vancouver, when really Calgary and to a lesser extent Seattle are the competition in this market.

Bunaby's high value real estate is probably owned by people who work in Vancouver for the most part anyway... it's right next door.

[Caliplanner1]

Originally Posted by WarrenC12

Residential and Commercial are two different things. There are many options for affordable housing, government assisted or not.

For commercial property, it should be 100% supply and demand, government hands-off for the most part.

I won't say more than to point to the reason why FDR's New Deal got engaged in the very expensive industrial/commercial infrastructure investment program called the TVA (which was located in the impoverished/weak profit yielding South) all at a time when the private sector (e.g. Con Edison electric power suppliers) could NOT (afford) do it. FDR's proactive economic/infrastructure development thrust via the TVA program triggered aggressive right wing ideological opposition on the grounds that public sector shouldn't make such economic inroads on potential private sector profit domain (which they on the right argued was the essence of communism)!!!! Thus, my position here in questioning why anyone would see a lack of (economic or business) efficacy if certain cities/urban governments seek to proactively attract more commercial activity after doing the (due diligence) of effective market research, adjusting government incentives towards securing tenant commitment and either developing desired infrastructure alone or in conjunction with the private sector???????

[Caliplanner1]

Originally Posted by WarrenC12

Residential and Commercial are two different things. There are many options for affordable housing, government assisted or not.

For commercial property, it should be 100% supply and demand, government hands-off for the most part.

I won't say more than to point to the reason why FDR's New Deal got engaged in the very expensive industrial/commercial infrastructure investment program called the TVA (which was located in the impoverished/weak profit yielding South) all at a time when the private sector (e.g. Con Edison electric power suppliers) could NOT (afford) do it. FDR's proactive economic/infrastructure development thrust via the TVA program triggered aggressive right wing ideological opposition on the grounds that public sector shouldn't make such economic inroads on potential private sector profit domain (which they on the right argued was the essence of communism)!!!! Thus, my position here in questioning why anyone would see a lack of (economic or business) efficacy if certain cities/urban governments seek to proactively attract more commercial activity after doing the (due diligence) of effective market research, adjusting government incentives towards securing tenant commitment and either developing desired infrastructure alone or in conjunction with the private sector???????

[BodomReaper]

Originally Posted by Caliplanner1

I won't say more than to point to the reason why FDR's New Deal got engaged in the very expensive industrial/commercial infrastructure investment program called the TVA (which was located in the impoverished/weak profit yielding South) all at a time when the private sector (e.g. Con Edison electric power suppliers) could NOT (afford) do it. FDR's proactive economic/infrastructure development thrust via the TVA program triggered aggressive right wing ideological opposition on the grounds that public sector shouldn't make such economic inroads on potential private sector profit domain (which they on the right argued was the essence of communism)!!!! Thus, my position here in questioning why anyone would see a lack of (economic or business) efficacy if certain cities/urban governments seek to proactively attract more commercial activity after doing the (due diligence) of effective market research, adjusting government incentives towards securing tenant commitment and either developing desired infrastructure alone or in conjunction with the private sector???????

"Developers aren't building shiny office towers in my city" isn't a market failure that warrants correcting action by government. If creating commercial space in a given area is a good proposition with an acceptable level of risk, rest assured it will be created by one of many professional firms that exist precisely for that purpose. Having government gamble in real estate doesn't make any more sense than it trying to run retail stores directly.

[EastVanMark]

Originally Posted by Caliplanner1

The reality in economic/planning history is that from time-to-time government input at various levels and in a variety of ways-e.g. via tax breaks, zoning regulations or infrastructure development assistance to the private sector as seen during periods of economic downturn etc.- have effectively served to drive urban/real estate development in the holistic/mutual interest of both the wealthy and the impoverished!

All of those things you pointed out have historically been used quite effectively in other jurisdictions. However, the measures you pointed out are positive, proactive, measures that, once implemented, are still subject to free market variables. The measures described here are simply social engineering exercises. The idea of trying to restrict commercial development in one area in efforts to direct them into a suburb is virtually unprecedented in North America and a shrine to ineptitude.

[Caliplanner1]

EastVanMark, although Los Angeles does have a well defined CBD core that holds that metro region's highest and most dense skyline there is also a very scattered distribution of mini CBDs with places such as Warner Center, Pasadena, Long beach, West L.A., Glendale/Burbank etc., all providing vibrant alternative office markets to the downtown area.

[EastVanMark]

Originally Posted by Caliplanner1

EastVanMark, although Los Angeles does have a well defined CBD core that holds that metro region's highest and most dense skyline there is also a very scattered distribution of mini CBDs with places such as Warner Center, Pasadena, Long beach, West L.A., Glendale/Burbank etc., all providing vibrant alternative office markets to the downtown area.

We also have scattered CBD's (sort of) in our region. However, we also have some political entities that call for the restriction of commercial development in one area in favor of another. Instead of being innovative, competitive or taking a broader, more organic approach to overall economic prosperity of the region (as is done in almost every other region in North America), they choose to take the Communist, planned economy approach and try to dictate where, and how fast new commercial development should take place. When that approach predictably fails, they then take to complaining in efforts to get others to change course which will only hurt the entire region in the long run economically.

[s211]

Originally Posted by queetz@home

I think Coquitlam, if they really really want a major office building in its town centre, should do what Surrey (indirectly through ICBC / Central City) and New West (directly with Anvil) did. They have to get an office tower built anyway, and then wait for tenants to come. Its risky, but sometimes you have to "kickstart" something to get people to come.

That worked out well for Anvil Centre in New West, didn't it.

[s211]

Originally Posted by EastVanMark

As was mentioned by Vancouver councillor Reimer in an article regarding this issue, companies will not move to where the region thinks they should go. They are deciding between opening operations in Vancouver or Calgary, not Vancouver or Coquitlam. The region needs to butt out of such affairs and stop trying to dictate where commercial development growth should take place as a previous poster aptly put it like a "Soviet planned economy."

Absolutely!

As I've heard it expressed, planners are trying to force office development all over the place that in no way is responding to market demand. There's a lot of new suburban office stock out there that was built and/or is planned for purely ideological demand. Burnaby's turning into a real poop show in that regard.

[WarrenC12]

Just keeping score on our friend Derek Corrigan:

1. He wants Vancouver to stop building office space and somehow force developers to build more in Burnaby.

2. He doesn't want to spend any more on public transit. He's against the plebicite, against any additional taxes, doesn't want to see new rail in Vancouver or Surrey (reading between the lines, Burnaby got theirs, F-everybody else)

3. He doesn't want to build or spend any money on the homeless or social housing in Burnaby because it's "not his problem".

This clown is quite a piece of work. I wonder why he doesn't get called out more. He's like the worst parts of right and left wing politics.

[SFUVancouver]

A recent JLL market report is pretty relevant to this discussion. Titled 'Rapid Transit Remains a Key Driver in Metro Vancouver Suburban Office Market', it spells out pretty clearly that there is a price premium for office space within close proximity (500m) to rapid transit in the suburban office market and a leasing headache for office product that is neither new nor within proximity to a SkyTrain station. Here's a great quote:

"Tenants will pay a premium for direct access to the SkyTrain and owners of rapid transit-oriented office buildings are subsequently able to benefit from higher rents and lower vacancy rates. In Richmond, for example, buildings within 500 meters of a Canada Line Station are 4.6 percent vacant while buildings slightly outside of walking distance, within 500-1000 meters from the nearest station, currently have more than five times as much vacancy at 27.5 percent."

Even better than the breif JLL report is the 2014 Rapid Transit Index study, which goes into detail about the office market in Metro Vancouver and rapid transit. It notes that there is still a 'tale of two cities' playing out in Metro Vancouver, with North of the Fraser office product near SkyTrain stations commanding higher rents and lower vacancies than office product near SkyTrain in municipalities south of the Fraser (Surrey). Richmond has the lowest office vacancies rates for product near stations of all of suburban Metro Vancouver. Anvil Centre, which remains vacant, doubled the office vacancy rate for New Westminster.

Some key findings:

* From 2005 to 2011, 74.6% of completed suburban office construction was further than 500 meters from a rapid transit station.

* From 2012 to 2016, 89.7% of confirmed new office construction is within 500 meters of a rapid transit station.

* Furthermore, 90.2% of proposed office space in the development pipeline is within 500 meters of a rapid transit station.

* There is an average premium of $5.76/ft2 for suburban office product within 500m2 of SkyTrain stations versus suburban office product outside of that radii.

* In the City of Vancouver, vacancy in buildings located 500-1,000 meters from the nearest rapid transit station is more than double that of transit-oriented buildings (11.0%).

* In the City of Burnaby, asking rates for transit-oriented buildings increased by 4.8%. In contrast, asking rates office product away from rapid transit declined by 6.8% and corresponded with a 3.1% vacancy increase.

* In the City of Surrey, for office product near rapid transit vacancies are 14.3% less than that of office product away from rapid transit, while average asking rates for transit-oriented buildings are 35.4% higher than those without direct access to rapid transit.

* In the City of New Westminster, in the wake of the 2013 completion of the Brewery District and recent delivery of the Anvil Centre, average asking rates for transit-oriented office space have increased from $16.47 in Q1 2013 to the current
average of $21.98, an increase of 33.5% that can be attributed to the influx of new class A supply. The combination of new class A inventory near rapid transit and modest demand from new tenants has resulted in downward pressure on class A
asking rates for product away from rapid transit, which have declined by 7.0% since Q3 2013 but remain 47.2% higher than class B office buildings away from rapid transit. This substantial disparity is not limited to the office market away from rapid transit, however, as class A buildings near rapid transit have asking rates that are 67.8% higher than those in class B buildings near rapid transit.

* In the City of Richmond, despite a 0.4% vacancy increase over the last 12 months, Richmond has the lowest vacancy rate for product near rapid transit of all submarkets serviced by rapid transit for the second consecutive reporting period. In a stark contrast to the 4.6% vacancy rate for buildings within 500 meters of the nearest Canada Line station, vacancy in office buildings located between 500-1,000 meters from the nearest station is almost six times higher at 27.5%. Although Richmond’s major off-transit business parks have seen some activity since the last reporting period, there are still large blocks of vacancy (26.8% in Crestwood Business Park, 30.9% in Richmond Corporate Park and 8.8% in Airport Executive Park) that create the bulk of Richmond’s 17.1% vacancy rate for office product away from rapid transit.

[PaperTiger]

Originally Posted by WarrenC12

Just keeping score on our friend Derek Corrigan:

1. He wants Vancouver to stop building office space and somehow force developers to build more in Burnaby.

2. He doesn't want to spend any more on public transit. He's against the plebicite, against any additional taxes, doesn't want to see new rail in Vancouver or Surrey (reading between the lines, Burnaby got theirs, F-everybody else)

3. He doesn't want to build or spend any money on the homeless or social housing in Burnaby because it's "not his problem".

This clown is quite a piece of work. I wonder why he doesn't get called out more. He's like the worst parts of right and left wing politics.

Yet he gets re-elected by a landslide every time. I guess his "As long as I get mine, F- everyone else" attitude really resonates with the good folks of Burnaby.

Seriously this guy is mayor for life.

[The_Henry_Man]

Originally Posted by PaperTiger

Yet he gets re-elected by a landslide every time. I guess his "As long as I get mine, F- everyone else" attitude really resonates with the good folks of Burnaby.

Seriously this guy is mayor for life.

Term limits we need!!!!

[urbancanadian]

Metro Vancouver has released an excellent report on office development in the region. The document has a TON of great info on everything related to office space, demand, tenants, head offices, inventory, trends, transit, etc. And tons of info specific to each urban centre/municipality/market/etc. Here it is:

http://www.metrovancouver.org/servic...March_2015.pdf

I haven't read through the whole thing yet, but some interesting numbers near the beginning:

- There are about 270,000 jobs in the Metro Core.
- There is approx. 74,000,000 sqft of office space in the region (10,000+ sqft)

- 45% of the office space in the region is located in the Metro Core (downtown Vancouver and the Broadway Corridor); 51% is located in Vancouver. Other notable, although much smaller, markets include Burnaby, Surrey, and Richmond.
- Most office buildings in the region are under 100,000 sq. ft. in size; the average building size is 55,000 sq. ft. and the median building size is 31,000 sq. ft.

- 60% of office space located within 800m of a rapid transit station. Another 24% is within 400m of the Frequent Transit Network. Meaning that 16% is not located near frequent transit (ie. car-oriented). The worst offenders being Richmond and the Langleys.

There are lots of "basics" as well for anyone wondering how companies choose their locations and, more importantly, why. Starting on p.53 (4.3).

-------------------------

Some other info regarding some smaller future developments:

- They indicated that the Yuanheng development at Broadway & Hemlock - currently a temporary Downtown Toyota dealership - will be about 200,000 sqft.

- Port Capital Group has a 37,800 sqft. development planned at 328 West 2nd Avenue, called Origami Place. Is that the render posted in another thread somewhere, by Arno Matis Architecture?

- Also, it looks like Porte Developments and Reliance Properties are planning 144,000 sqft of office space at 339 East 1st Avenue. That's right next to the planned student residences (rentals?) for the GNW Campus.

Anyway there's lots of info and it's an easy read, so I would recommend downloading it. BTW, Gordon Price posted about this on his blog, so that's how I came across this.

[hollywoodnorth]

Originally Posted by urbancanadian

- Port Capital Group has a 37,800 sqft. development planned at 328 West 2nd Avenue, called Origami Place. Is that the render posted in another thread somewhere, by Arno Matis Architecture?

this one >> http://www.arnomatisarchitecture.com...alifornia.html

?

[officedweller]

Here it is - I think it's a new design by a different architect:

http://www.bozyk.com/origami.html