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Recession draws businesses back to central Vancouver

November 11th, 2010 · 59 Comments

Following up on the news that Telus is planning a new office tower on Georgia Street, I gathered up bits of information I’d been hearing for a while about various businesses moving back in to Vancouver, along with office towers being planned.

Along the way, I came across numerous updates on commercial leasing in Metro Vancouver that indicated that expensive Vancouver’s vacancy rate was going down, while the vacancy rate for cheaper commercial space in several suburbs has been going up. Seemed strange to me during a recession, but as John Tylee from the Vancouver Economic Development Commission explained in my story today, that’s the way recessions work. Businesses go two ways — super-cheap (and I saw in one commercial real-estate newsletter that those who are locating in the suburbs are bargaining hard for lower prices) or upscaling.

There are other factors at work making downtown Vancouver or the Broadway stretch attractive: transit, for one.

(I understand that one of the problems for Microsoft in Richmond — possibly just urban myth — is that many of their young workers coming from downtown, where they prefer to live, weren’t available to work until 3 a.m. because of the restrictions on their N licences. )

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  • Jason King

    Chris,

    Yes, pretty much any factor COULD be a “possibility” Chris…no matter how unlikely. And no, you’re right, no need to backtrack because you never make a definitive statement…that might require you to PROVE your statement, and god knows you don’t want to have to do that.

    And Chris, my desire to call you out isn’t mono-maniacal….mono-maniacal would be a person who has a pathological preoccupation with one thing….say….oh…I don’t know…bike lanes. And they feel the need to make every bloody discussion, no matter how unrelated, about them.

    Try picking up a book on another subject Chris…there’s lots of interesting things going in the world beyond bike lanes.

  • Chris Keam

    Don’t go away mad Jason….

  • Jason King

    If you’re trying to call at truce with the help of Motley Crue….I might just have to take you up on that.

  • Bill McCreery

    @ Jason 39. You are right “an increased emphasis on commercial is now needed”, the ? is how big is appropriate here? I have not yet checked the City’s info on this PROPOSAL to see if they give some sort of rationalization to justify more than doubling the density. It would also be enlightening for them to let us know what the earlier City rationalization was for the 4.0 FSR so we might be able to make an informed assessment as to whether or not this current PROPOSAL is OK.

    In addition to Burrard Gateway & that the area “already had access issues”, there is the just approved spot rezoning @ 1304 Hornby across the street. That building will be 309′ in a City rationalized 300′ limit area, 12.44 FSR in a 5.0 zone, 196 unit building with 75% parking. I predict suite owners there will be doing what I’ve had to do @ 1333 Hornby, also with 75% parking, that is go to the hotels a block away to rent parking @ 3 times what it is in my building.

    By the way it’s curious that since all these ‘Gateways – Marine, Burrard & is it Granville? will be adding to congestion that perhaps they should be called ‘Bottlenecks’ instead. A gateway by definition is a place which allows one to pass through.

  • Wendy

    Getting away from the bikes for a minute….

    This has been an odd recession in the history of office space vacancy in Vancouver (or Toronto). Past economic slow downs (if we include 2001) and recessions have occurred simultaneous with the opening of new office space and often some broader restructuring (downsizing from mergers and acquisitions, for example) such that vacancy rates shot up.

    High vacancy gave tenants a lot of bargaining power, such that some were able to relocate downtown–previously unaffordable.

    This time around, the vacancy rate downtown remained in the 4%-6% range, which is usually considered a “landlord’s market.” Although demand has been fairly soft from what I hear, as companies are cautious with the US econ so slow, there is also limited space allowing landlords to keep rental rates strong.

    So, this “recession” is different. There are no bargains downtown. And yet, companies still want space there–for other reasons.

    There are efficiencies as an earlier commenter pointed out (if you do business with lots of downtown firms, it’s easier to be located within a few blocks). Also, it’s easier to attract and retain staff with a downtown location. Transit, and “being central” are key–plus the amenities nearby.

    Plus, some companies do have a “green mandate.” They don’t want to be seen as contributing to sprawl. And they do want to be in signature “green” buildings.

    Hope this adds some helpful context (that doesn’t involve bikes).

  • Frances Bula

    @Wendy. Thanks for that extra context re previous recessions, which I didn’t know about.

  • metrotownworker

    just wondering when the demand for “downtown” office space will spill over or tickle down into Metrotown… tower III is on hold, and a major tenant is about to vacate one of their other towers for a more remote location.

  • Joe Just Joe

    Not sure if Translink moving to the Sapperton really counts as a more remote location, as it might not be as central as Metrotower but it is also combining other offices that really are remote.
    Now if Rogers were to vacant Metrotown for the new Aquillini office building then I can’t imagine there being demand for the 3rd tower at Metrotown this decade. There has been some recent activity there again as of late last week.

  • Ron

    Coast Mountain Bus Co. is presently at the Gateway Tower in Surrey – not sure if they are also moving into the Brewery District site with TransLink – the new site sits about halfway between the two.

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