Tightening Vancouver office market spurring more downtown development

Lower vacancy and positive absorption rates were found in both the downtown core and suburban markets so far this year, the company said in its 2011 Metro Vancouver Office Market Report.

But the city and suburban markets remain starkly disparate – the downtown office vacancy rate was 5%, compared to 23.9% in Richmond. The overall office vacancy rate for Metro Vancouver was down to 7.6% by June 30 this year, from 8.4% in December 2010, according to the report.

“With two major developers announcing plans for new office buildings in the downtown core by the summer of 2014, tenants are considering their options and deciding whether to renew their existing premises,” said Michael Keenan, senior vice president and managing director of Avison Young’s Vancouver office.

Tenants might also consider space elsewhere in the core or in a market that can accommodate corporate expansion over the next 30 months, he said.

Oxford Properties has received a permit for a 35-storey, 270,000-square-foot office/retail project at 1021 Hastings Street, and expected to be completed in 2014.  

Westbank Projects has proposed a 22-storey office tower with 500,000 square feet as part of a 1-million-square-foot Telus Garden development on the 700 block of Richard Street, planned for an August 2014 opening.

Bentall Kennedy is a little further off with a 23-storey, 365,000-square-foot office tower at 745 Thurlow Street. The permit is in hand there, but the demolition of the existing site won’t happen until the fall, and completion expected in 2015.

But while the city’s office market remains the tightest, suburban market have also started to stabilize.

“Suburban office markets have largely stabilized and trended positively in the first half of 2011 amidst declining vacancy and increased positive absorption,” Avison Young Principal Darrell Hurst said. “With overall suburban vacancy at its lowest point since year-end 2009, the markets with negative absorption – namely Richmond and Broadway – are in fact relatively stable or even improving when compared to each submarket’s performance during the past 18 months.”

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