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The Retail Apocalypse: Here's How Millennials are Changing the Retail Marketplace (2017-06-22)

Posted By Administration, Thursday, November 14, 2019

Fom Sears to Esprit to Danier Leather, once long-standing stores who were staples in malls across Canada have been closing their doors for good, sparking what’s called a “Retail Apocalypse”. This same pattern is happening south of the border, with popular anchors like JC Penny, Kmart, and Macy’s announcing hundreds of store closures. Even the iconic Hudson’s Bay is reported to be contemplating closing their ‘crown jewel’ locations in order to stay afloat.

“Retail has always been about adaptation versus adoption,” said David Ian Gray, Founder of DIG360, which helps retail executives navigating this difficult time of change. “It’s a form of Darwinism. Some people win, some people lose.”

We all know that technology has been the pivotal disruptor that’s shifted foot traffic to mouse clicks, but Gray explains that tech has always changed the retail landscape.

“Refrigeration allowed for grocers to sell perishable items. The automobile meant that people could travel farther than their corner store and shop in malls. Credit cards, bar codes, I really could go on and on. Technology has always changed the way retailers operate.” 

So if technology has always been prevalent, what’s the real reason behind so many bankruptcies and ‘for lease’ signs strewn across storefronts? According to our June 22nd panel, it all comes down to Millennials, who are controlling the marketplace.

“Never before has the industry had a more digitally native, price-oriented, and global customer,” said Rick Kohn, Deloitte’s BC retail and consumer products leader, and partner in the Deloitte Private Audit and Advisory Practice. “This group is highly experience-oriented, heavy on lifestyle, and favours sharing assets over heavy asset consumption, like Uber and AirBNB.”

It’s clear that Millennials don’t need the in-store experience in order to make a purchasing decision. Retailers are spending millions of dollars trying to connect to the needs of this dynamic consumer base, with even premium retailers getting on board. It wasn’t until recently that fashion houses like Prada and Chanel began to offer online shopping, finally realizing that the younger generation shops both discounted retailers and high luxury items all in one day.

From artificial intelligence to omnichannel integration, according to Joel Turner, Senior Manager at Deloitte’s Retail Industry Consulting practice, “Nobody’s doing it right. Price and experience are what bring people in stores, and I don’t think there’s one retailer who has mastered the perfect combination of both.”

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The Rise of Co-Working Spaces in Vancouver (2017-06-17)

Posted By Administration, Thursday, November 14, 2019

With the tech sector becoming a dominant industry in the Vancouver office market, companies who need large spaces to accommodate their growing staff could soon be forced to look elsewhere. With limited supply available, there are limited options for tech companies who demand for more than 2,000 square feet -- especially in the next two years.

“If tenants want a large space by 2018, there are very, very few options. If you don't want to spend money on tenant improvements the list is even shorter,” said Mark Trepp, Senior Vice President at JLL. “Otherwise, they’ll have to look at short term fixes. Co-working, small packages if you can find it, or have more than one location.”

With companies like Regis, WeWork, and The Profile, co-working spaces in Vancouver have become a popular alternative. With relatively lower rents than private offices and a collaborative design concept that emphasizes teamwork, it’s been an attractive option for all types of organizations. From independent contractors to flourishing startups, some of the benefits of co-working spaces are that they bring together a variety of industries that promote networking, offer lease flexibility, and allow tenants to work in a higher quality office or location that would be otherwise beyond their budget.

Given the lower price tags, more square footage, and availability to accommodate move-in dates, some wonder whether co-working spaces will outperform private office leases, especially in the tech industry

“Seattle has over 24 co-working spaces in that city, and it’s only made a material impact for tenants under 2,000 square feet,” said Kevin Nelson, Senior Vice Presidents at CBRE. “The large guys aren’t biting on it at all. Doing head leases when you’re under 2,000 square feet may impact that zone, but it’s not going to attract a large Amazon-style requirement or anything like that.”

Jeff Rank, Senior Vice President at Quadreal, shared how co-working is targeting a different market than large tenants, in particular smaller startups who want flexibility in terms and sizing.                                       

“There’s a place for the Regis and the WeWork’s; however, how deep that market is and who that market is going to cater to may be in the short term. If there’s no other options for 2018 or 2019, [companies may opt for co-working spaces] but that’s not going to the end game. These companies will be planning for their own space eventually. To say there’s no room for co-working spaces isn’t quite accurate, but we’re not seeing the beginning of something much bigger in my opinion.”

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Vancouver Commercial Real Estate: The Evolving Tenant (2017-06-07)

Posted By Administration, Thursday, November 14, 2019

If you read our recent blog post, then you’re up to speed on just how much the technology sector is growing in Vancouver. With close to 9,000 tech jobs added to Metro Vancouver over the past three years, global brands and promising startups are moving to the west coast -- and not just for our mountain peaks and waterfront views. With America’s current political landscape and the growing attractiveness of the Canadian dollar, culture, and community, many are wondering whether tech has become Vancouver’s market segment.  

“Tech has found us in a lot of ways, given the type of people here. The lifestyle, the city itself is certainly attractive, and has lot of similarities to tech cities in the States. A lot of that has come our way as a result,” said NAIOP panelist Jeff Rank, Senior Vice President at Quadreal, at our May Breakfast event.

“Most recently I’d say that I wasn’t a fan of Donald Trump when he was first elected, but some of the things he’s done and the instability he’s caused has certainly benefited this region when it comes to bringing talent to Canada versus the United States. So for that I’m grateful.”

New Builds vs. Existing Product. What Do Tech Tenants Want?

With a reputation for wanting innovative office spaces, developers are creating buildings that are thought to attract tech giants like Microsoft, Facebook, and Sony. However, Rank notes that new shiny buildings are actually not what these tenants want. New may not always mean better, as more tech companies are gravitating towards retro interiors.  

“The war for talent is being fought with space right now,” notes Kevin Nelson, Senior Vice President at CBRE. “In fact, HR has a bigger role at touring real estate right now than the real estate department, because if you don’t have space for new hires, what’s the point? I agree with Jeff; new is cool, but that’s not everything. It’s about geography and proximity, and quite frankly we have a lot of steps to learn from our markets down the coast from us.”

Move Over Tech…

Despite the hype around this sector, some experts say there are signs that other industries will start to compete for square footage in Metro Vancouver, including a very strong resurgence from natural resources.

“I’m not convinced that we’re a one-trick pony,” said Mark Trepp, Senior Vice President at JLL. “I am convinced that the other sectors that have been more traditional to Vancouver are on the verge of a resurgence. Services, real estate, lawyers; everyone is doing better and expanding, it’s not just one opportunity or industry.”

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Technology Outperforms in Demand for Office Real Estate in Vancouver (2017-06-01)

Posted By Administration, Thursday, November 14, 2019

For those involved in office leasing, it should come as no surprise that technology has outperformed all other industries in terms of growth, demand, and occupancy. Since 2014, the tech sector has grown at an impressive pace, adding 8,700 positions to our city. In order to attract top talent and clientele, high quality space has come at premium. In fact, new builds are in a very limited supply, particularly for large block requirements by tenants.

Now home to some of the biggest names in the business, it’s little wonder why Vancouver has been coined the ‘Silicon Valley of the North’. Hootsuite, Microsoft, Sony Pictures Imageworks, and Vision Critical are some of the largest employers in the city with a global reputation, and thanks to the current Trump administration, more could be on the way to set up shop on the west coast.

News 1130 recently reported that a number of large tech companies are looking at opening satellite offices here due to the current United States President, who is challenging H-1B visas. This would limit the number of foreign talent being able to work in the U.S. in favour of domestic hires. However, as 43% of tech company founders in Silicon Valley were not born in the States, relocation could become obligatory, rather than volunteered.

As Microsoft Canada President Janet Kennedy said, “We could have gone anywhere in the world, and we picked Vancouver.” With its ideal position closest to California, Vancouver would be the most logical place for these companies to move to over Toronto. Drawn to the mountains, ocean, and great outdoors, and the fact that they’d be surrounded by an existing tech community, demand for more office space could grow significantly in the near future. Ranked as the third most livable city in the world by The Economist, the fifth most tax competitive by KPMG, and one of the top 20 startup ecosystems in the world, it’s a natural choice for those who don’t shy away from expensive real estate.

Developers are trying to keep up with the pace, with the total potential office construction in the next two years spanning 4,144,000 square feet, which is 16.3% of the current downtown inventory and 27.2% of the current downtown A Class inventory. This surge of construction will create 27,2625 jobs, or 19.1% of the current jobs. But will it be enough?

“We’ve had a great ride, and whether the ride is over is still up for debate. We’ve got to make sure we’re keeping our minds open, and looking in other pond to fish for tenants,” said Jeff Rank, Senior Vice President at Quadreal, who oversees all leasing activity for BC office and industrial assets as well as pre-leasing activity for new developments.

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Could Bitcoin be the New Commercial Real Estate Currency? (2017-05-18)

Posted By Paul Kool, Thursday, November 14, 2019

If you’ve been reading the news lately, you may have caught the story about a Metro Vancouver home advertised for sale on Craigslist in Vancouver and Hong Kong for $2,099 Bitcoin. Equivalent to $5 million Canadian (which was double the MLS price) this listing drew media attention due to China’s crackdown on currency outflows, since residents are not allowed to take out more than $50,000 out of the country for investments, especially to invest in residential real estate abroad.

Since the controversy hit the press, the ad has been taken down. However, it raises attention to whether Bitcoin is the way of future, and whether this will soon become an accepted, maybe even preferred, form of transactions for foreign investors in the commercial real estate industry.

Bitcoin gained a lot of attention back in 2009 as the first digital payment system. One of the major selling features was the freedom and speed of the transactions, meaning you never had to wait for bank hours to send a transaction and could bypass all banking fees. The ease of Bitcoins means you can send and get money anywhere in the world at any given time.

Despite these pros, Bitcoin hasn’t been adopted on a mass scale, and until this article, did little to roam the headlines. While some businesses are accepting Bitcoins, it’s far from widespread. This is mainly due to a lack of awareness and understanding over of how it works.

With fewer fees, the commercial real estate industry could cut considerable costs and increase efficiency by enabling secure, peer-to-peer payments. This makes it easier for people to invest - however, as we saw this week, would have to be better monitored so investors wouldn’t violate the governing laws of their country and of Canada’s.  

For now, it will be a considerable amount of time until Bitcoin is accepted as a form of payment for the real estate industry. In Canada, real estate agents are not allowed to accept digital currency because it hides the purchaser. As Western Investor explains,  “Under Canada’s Proceeds of Crime and Terrorist Financing Act, a realtor must be able to positively identity the people involved before a transaction can complete.” To date, Australia has the only real estate company that’s accepting Bitcoins from foreign buyers.

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The Next Big Thing: Up and Coming Spots for Commercial Real Estate (2017-05-10)

Posted By Administration, Thursday, November 14, 2019

It’s no secret that Vancouver’s limited land availability has caused many businesses to seek commercial real estate in the surrounding suburbs. Due to this low supply and high demand, there are a few emerging hot spots in the Lower Mainland that are garnering serious attention, both from developers and the media.

Recently reported in The Vancouver Sun, UniverCity is expected to double to 10,000 residents over the next five years. With its secluded location, commercial retailers are currently in demand to accommodate the growing needs of this emerging town centre. Comprised of mid-rise and low-rise condos, townhomes, and commercial buildings, Simon Fraser University is looking for more diverse retailers and services to join the neighbourhood and accommodate the future residents.

Earlier this month, the Beedie Development Group broke ground on the highly anticipated Delta Link Business Park, one of Western Canada’s largest private industrial projects currently under development.

"Without question, the current industrial market is the strongest Beedie has experienced in its 63-year history," said Ryan Beedie, the company's president. "Delta Link Business Park is already 70% sold or preleased, which is an unprecedented level of commitment. We are excited to be creating hundreds of job spaces on a site that has been largely vacant for 20 years."

Jason Kiselbach, an associate vice president with CBRE, shared how Surrey and Delta have attracted 64% of the industrial demand in the region. This is partly due to the location, as Delta is the hub of transportation networks, making it perfectly situated for companies that need to be centrally located in Metro Vancouver.

With more residents leaving Vancouver for a more affordable yet central option, New Westminster is poised for a real estate investment boom over the next 10 years. Also reported in The Vancouver Sun, its attractiveness lies in its relatively affordable housing costs, SkyTrain connections, and its comparatively low commercial development fees.

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Political Predictions with Vaughan Palmer (2017-04-28)

Posted By Administration, Thursday, November 14, 2019

Back in 2013, no one expected the Liberals to win the election. With a leader that wasn’t supported or liked by her own party and the NDP a reportedly nine points ahead, it was clear come election day who would be BC’s next majority.

But as award-winning journalist and political columnist Vaughn Palmer explained, “Christie Clark is a formidable campaigner. And from what we’ve learned from that election, no one is going to mess with her again.” And those nine points? Turns out they were incorrectly accounted for, which meant the NDP was really only 4 points ahead of the Liberal Party; information that came too little too late. As Vaughn pointed out, people didn’t show up to vote for the NDP because they believed they didn't have to. It was a sure thing.

As we now learned, Clark and the Liberal party did win that election, and with the next one just days away, Palmer shared the current issues that will decide who will reign for the next four years at our latest Breakfast Event.

Voter Turnout

“There’s a reason politicians campaign more for lower fees on hip replacements and less about rising student debt. It’s because people who are 60 years of age and older actually turn out to vote. Young people don’t.”

Four years ago, 45% of the province didn’t vote, and the majority of this demographic was under the age of 40. However, during the federal election just two years later, it was a much different outcome. Half a million more people in this age group did turn out and vote to place Trudeau as Prime Minister.

This show just how volatile a time we are in. People are calling for a change. So if just 100,000 Millennials turn up for this upcoming election, it could drastically change the seats across the province.

Trump and Trade Issues

The current trade issues between the US and Canada have recently become front-page news, as Trump has blasted Canada for recent regulations that could bankrupt Wisconsin’s dairy farmers, as well as continuous issues over softwood. This has created “a wrinkle into the election that Premier Clark can now cling to, which was apparent in the latest debate”. 

Liberal Ad Campaigning

Though the Liberal Party has much more financial support, Palmer noted that they’ve spent about the same amount of campaign dollars as the NDP. However, the parties opted for a much different strategy. Whereas the NDP came out strong with their ads at the beginning of the campaign, the Liberals are waiting for these last few days to push their messaging. How or if this will affect the voters will soon be revealed.

Vote Splitting

The NDP has never won an election without vote splitting. This is when the distribution of votes among parties reduces the chance of winning for any of the similar candidates, and increases the chance of winning for a dissimilar candidate. If the parties experience a similar outcome, a new leader could emerge.

Palmer’s Prediction

“The NDP has to pick-up 10 seats to be the majority, and that’s no easy task. Unless there’s a huge shift in opinion or a vote splitting with the Green Party, the odds are stacked against them. I think there will be a reduced majority for the Liberals, but otherwise they’ll voted in for another four years.”

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The Future is Green: Building an Eco-Friendly Commercial Real Estate in Metro Vancouver (2017-04-12)

Posted By Administration, Thursday, November 14, 2019

With a pledge by Mayor Gregor Robertson to become the greenest city by 2020, Vancouver’s green transformation is underway. From new bike lanes to LEED certification, sustainability and eco-friendly building practices are now expected, rather than an added bonus. Thanks to savvy Millennials who are conscious of their eco footprint and the rise in climate change, electric cars are now the new luxury vehicles and zero waste is the new recycling. With the demand apparent, sustainable commercial real estate has become an attractive selling point in Metro Vancouver.

An upcoming project by Hong Kong-based Brilliant Circle Group (BCG) is spearheading this new wave with their 232-acre development on the Port Moody-Anmore border. Recently featured in The Westender, BCG hired Peter Busby of Perkins + Will to bring an environmentally aware element to the project. For many, Busby needs no introductions, as he’s renowned for introducing the Leadership in Energy and Environmental Design (LEED) system to Canada and founded the Canada Green Building Council as well as the Sustainable Design Initiative. Taking a progressive and holistic approach, Busby plans to incorporate storm water capture, a district energy system, and a range of density and housing types into the development.

Another local developer making the headlines for a sustainable acquisition is Vancouver-based Concert Properties. Reported in Western Investor, Concert will be managing the country’s largest sustainable warehouse, receiving the first LEED Gold Certification for a property of its size. Located near The Toronto Pearson Airport, Concert may be setting the tone for similar facilities here on the West Coast.

With new projects like Port Moody on the horizon, Vancouver is making a name for itself as a global leader in green building practices. At a previous Breakfast Event, architect and mechanical engineer Martin Nielson of DIALOG spoke about UBC’s Centre of Interactive Research on Sustainability (CIRS) as a prime example. Known as the most innovative and highest performing building in North America, its primary design goal was reach zero carbon emissions, be water self-sufficient, and create net-positive energy performance.

This concept, known as regenerative design, creates systems that restore, renew, and revitalize their own sources of energy and materials, essentially incorporating a zero waste infrastructure that includes the needs of the both the community and of nature. Now with consumer demand and new eco standards like, it may not be long before we see more of these types of regenerative designed buildings take precedent in the commercial real estate industry.

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Coming Soon: Three New Commercial Real Estate Projects in Vancouver (2017-04-07)

Posted By Paul Kool, Thursday, November 14, 2019

From office to industrial, check out some new unique commercial properties coming to the Vancouver skyline.

Ironworks by Conwest

Developed by Conwest, Ironworks will be a stacked industrial and office project spanning 2.3-acres. Located at 200 Victoria Drive just north of East Hastings Street, it’s expected to complete in 2019 and will comprise of two buildings, both offering ground floor light industrial and warehouse space, 26-foot-high ceilings and loading docks, and showrooms with offices above.

Given the high demand for industrial properties, the project has garnered a lot of interest, as units have already sold at $330 to $600 per square foot. Visit Western Investor for more details.

Burrard Place Tower by Pattison Group and Reliance Properties

Bringing approximately 250,000 square feet of office space to downtown, Burrard Place will be a welcomed addition in a market with notoriously high demand and very low supply. The $500 million development by Pattison Group and Reliance Properties will be a four-tower complex with two mixed-use residential and office buildings, incorporating strata and leasable spaces. It will also include a 13-storey rental office building, a multi-level Toyota dealership, and a 25-storey rental apartment tower. For more information, read the interview in The Vancouver Sun.

Spaces by Regus

With the growing rate of freelancers and startups in the city, coworking spaces have become a popular alternative to expensive office leases and working from home. Regus, one of the largest providers of office space in the world, is clearly hopping on this trend. Working under their brand ‘Spaces’, they’ll be launching a new co-working building in Gastown at 151 West Hastings. Amenities include team rooms, a business club, and a large rooftop patio that will be available for access 24-7 for all members. Check out The Province for further details.

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Going Up: Commercial Real Estate Increases by 47% (2017-03-31

Posted By Administration, Thursday, November 14, 2019

Despite what the headlines may say, residential isn’t the only industry that’s seeing a significant spike in value. Earlier this month the Real Estate Board of Greater Vancouver (REBGV) released a report that commercial real estate sales reached nearly $13 billion in 2016. This marks a 47% increase compared to the $8.8 billion in sales the year before.  

Short Land Supply

Cities in the Lower Mainland are seeing just as much demand as Vancouver’s downtown core. Surrounding municipalities like Richmond and Burnaby are becoming increasingly sought-after due to their close proximity to the city centre and infrastructure. The Vancouver Sun reported earlier this year that “Richmond’s office vacancy has been on a steady decline since cresting above 20% in 2012.” As of January 31st, 2017, this fell to 9.5%; down 12.6% in the first quarter of the year.

Vacancies are especially low in the industrial sector. “I’ve never seen vacancy as low as it is, and I don’t see it changing anytime soon,” said Lee Hester, Senior Vice President of Industrial Sales & Lasing at JLL. “Vacancy is declining in all areas of industrial, as spaces that are 2,000 to 25,000 square feet are in extremely high demand.”

Economic Growth

Coined the ‘Silicon Valley of the North’, Vancouver is becoming well known as a burgeoning tech scene. With Microsoft, Hootsuite, and Slack all calling YVR home, office spaces have quickly become difficult to come by. This is also true for the retail sector, as six Metro Vancouver malls were named the top producing shopping centres in Canada. Both office and retail sales hit record numbers, reaching $3.6 billion in 2016, which is $2.5 billion more than the previous year.

Foreign Investors?

Unlike the 15% foreign buyers tax on residential, commercial properties do not have a similar levy; however, the jury is still out on whether foreign ownership has anything to do with the sudden shortage of supply available. It’s thought that economic growth is mostly responsible for the sudden increase in demand.

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