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Balanced: The Vancouver Office Market (2016-03-03)

Posted By Administration, Tuesday, November 12, 2019

Industrial real estate isn’t the only market with a strong 2016 outlook, as the office market is also experiencing a balanced and busy year ahead. In Q4 of last year, Downtown Vancouver had a 9.3% vacancy rate, the suburbs were at 11.3%, and Metro Vancouver experienced 10.4%. Jeff Lim, Vice President of Leasing at Bentall Kennedy, said at our last Breakfast Event that this first quarter is the “busiest I’ve ever been”, noting that similar volume hasn’t been seen since 2008.

Naturally, a healthy economy means businesses are in need of office space to accommodate their growing staff. And though the natural resources market has fallen, “tech bailed us out”, according to Paula Wright, Leasing Director of Manulife Real Estate. Currently leasing close to 800,000 square feet of office space in Metro Vancouver, the technology and digital media sector are leading all other industries considerably. At a distant second place are consumer goods followed by

Other factors that have contributed to the current office market include positive migration and population growth. With more potential staff to employ, companies are drawn to this corner of Canada to monopolize on west coast talent. The rising American dollar has also made Vancouver an attractive choice, particularly to tech companies.  

And with our picturesque backdrop, world-renowned mountains, and laidback lifestyle, it’s no wonder that companies from the U.S. are enticed to relocate up north. Location is one of the most important factors to tenants, and Paula explains that companies need to attract the largest demographic of the workforce, millennials, by offering impressive office spaces in buildings close to transit.

Matt Walker, a Principal at Avison Young, also notes that flexibility has become a major factor in a tenant’s decision-making process. Because tech companies are always changing, they could rapidly grow or fold in just a few months. This means they can’t predict whether they’ll need more office space within six months, a year, or three. Therefore, they need shorter contracts and flexibility to accommodate the fast-paced lifestyle.

While leading experts agree that Vancouver’s office market is currently healthy, balanced, and normalized, there are some concerns that could affect the future of this dynamic market. Stay tuned, as we’ll cover these issues in our next blog post!

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The Challenges of Office Space (2016-03-11)

Posted By Administration, Tuesday, November 12, 2019

Despite low vacancies and record setting lease rates, Vancouver’s office market isn’t without its set of challenges. There are a number of current issues brokers, developers, and tenants face that could easily shift the current progressive environment. 

Lack of Supply

The fundamental concern for any branch of real estate in Vancouver remains the same: availability. Land is limited, which means every square foot comes at a premium. As industries like technology and consumer goods continue to lead the market, so too are their demands for more space with high-end finishes in a prime location. This means that those who require 50,000 sqft or more may have to seek offices outside our city or province altogether.


Speaking of our technology sector, it’s no secret this industry has experienced rapid growth over the past five years. And because this industry moves faster than any other, their potential to grow – or fail – can seemingly happen overnight. That’s why flexible contracts are key to hone in this sector, which remains a challenge to landlords who traditionally opt for 3, 5, or 10-year contracts.


Twenty years ago, a few key owners controlled the office market. Now, foreign investment has disrupted all facets of real estate, resulting in more competition for both developers and tenants. 

Millennial Demands

As the largest demographic in the Canadian workforce, employers have to cater their workspace to attract talent. From proximity to transit to brand new gyms, more and more companies are seeking state-of-the-art facilities to entice the next wave of professionals. This means lower grade buildings are no longer desirable, yet AAA buildings are becoming harder to find. 

Virtual and Co-Working Spaces

The traditional workplace has changed dramatically, as the internet has allowed employees to work both remotely and virtually. Replacing cubicles for coffee shops, companies are more inclined to cut the expense of office rents in favour of a co-working or cloud-sharing set-up. 

Gavin Reynolds, Senior Vice President of JLL, explained there are currently 6,000 students on the waitlist for housing at the University of British Columbia. This is just one example of how our residential market affects all branches of real estate. Although the Canadian dollar is attractive for American companies, our condo and housing prices are not. Finding places for employees to live has become a major deterrent, as demand and prices continue to skyrocket.

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Out With the Old…In With the New? (2016-03-21)

Posted By Administration, Tuesday, November 12, 2019

As industries like tech continue to grow, the demand for new buildings with prime amenities and luxury finishes is increasing. And while most developers and landlords would see this as beneficial, in Vancouver it’s becoming an increasing problem. The current supply of AAA buildings are few and far between, with the average age approximately 27 years old. In addition, there are more of the less desirable A, B, and C classes to choose from – options that simply won’t meet the expectations of big firms and Fortune 500s.

So what can landlords of these buildings do to compete? Paula Wright, Leasing Director of Manulife Real Estate, suggests there are three initiatives that should be undertaken:

  1. Renovate. To attract top tier clients, renovations are essential. She notes that "If you can put $3 million in marble, do it. You’re going to get it back.” This includes refining the lobby, upgrading gym equipment, and providing a more contemporary look and feel to the interiors.
  2. Work with what you have. In other words, if you’re in the B class, be the best of the B. Accept that you’ll never be AAA or demand those types of lease rates. Instead, strive to attract the kind of clients that are in your market and price range.
  3. Play up location. If the building is situated near a Skytrain, bus route, or within waterfront views, these assets are highly attractive to Millennials. And as many have foregone car ownership, try installing secure bike storage as well as offer electric charging stations for those who do venture in with hybrid or electric vehicles. 

While these initiatives will help to improve your vacancy rates and increase your rents, Maury Dubuque, Managing Director Colliers International, predicts in the next 15 years the entire city will be AAA buildings. He foresees that the current lower A, B, and C grades will be converted into residential, because in his words, “you can only use so much lipstick.”

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Design Principles for Mixed-Use Properties (2016-05-04)

Posted By Administration, Tuesday, November 12, 2019

As more and more people prefer to eat, shop, and live all without having to hop in a car, cities like Vancouver have had to adapt. And with limited land available, the development of mixed-used buildings, which combines commercial and residential, continues to grow. These structures are seemingly a win-win, providing homeowners with the convenience of a 'one-stop shop', and small businesses with built-in customers and exposure.

However, blending two types of real estate into one has its set of challenges. Peter Odegaard, Principal Architect at MCM Partners, says that mixed-use buildings are by far one of the most difficult to design. 

“Compromise is the key word with mixed-used,” says Odegaard. “When approaching a project, we always start with designing retail before residential because it’s easier to make changes to homes. But in the commercial spaces, once you’ve made the decision, it’s much harder to fix – if you’re able to fix it at all.”

For developers, having the tenants already secured is essential before architects can design the project. From ceiling heights to plumbing needs, some retailers, in particular restaurants, have very specific requirements in order to operate. 

“Twelve foot ceilings eliminates 80% of retail,” says Daniel Lee, Principal at Northwest Atlantic. “Tenants need high ceilings for things like equipment and lighting. That’s why education is key, especially for the City of Vancouver, who often doesn’t understand that height caps limit economic development.”

Unlike a residential tower, there are a number of factors that architects need to consider when designing mixed-use. This includes loading access for suppliers delivering products as well as ample parking for customers. Plumbing is also a big concern, as is lot size, sustainability, and exposure for retailers.

In terms of environmental responsibility, mixed-use facilities use the land more efficiently compared to separate commercial and residential towers. However, additional problems often arise, including trash, smells, and noise, which ideally are mitigated in the design.

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The Challenges Tenants Face in Mixed-Use Buildings (2016-05-13)

Posted By Administration, Tuesday, November 12, 2019

From the outside, mixed-use buildings seem to be the perfect marriage between residential and commercial. Not only do residents enjoy the convenience of having shops and restaurants at their doorstop, but retailers are also given a built-in customer base. And though one would think it’s a win-win, mixed-use has its own set of challenges.


As mixed-used buildings are becoming more concentrated in urban centers, the ratio of square feet to stalls decreases dramatically. This alone can be a deal breaker for many retailers – in particular, American companies that are used to freestanding buildings with large lots. Therefore, design becomes an integral component to creating efficient parking lots, as it will have to accommodate higher traffic compared to strictly residential towers.

But as Daniel Lee, Principal at Northwest Atlantic shared at last month’s NAIOP Breakfast Event, "The perception of parking is more important than it actually is. It’s less about the actual number of parking stalls, and more about functionality. Parents need to be able to park their minivans and have enough space to take out their strollers." For tenants, a negative parking experience could deter customers from visiting in the future.

"Giving residents control through strata is always a deal breaker for tenants, especially those from the U.S.," says Lee. With strata councils, businesses are often limited to when and how they operate. In some buildings, tenants are restricted to the hours of 9am to 6pm as a means to reduce noise, parking, and traffic for residents. For restaurants, patio seating is often a concern. Amanda Vissia, Real Estate Development Manager from Earls Restaurants, says that in concentrated locations such as Yaletown, Earls isn’t allowed to play music or have people on the patio past 10pm, after receiving complaints from residents.

When considering a mixed-use building, retailers should note that the operational costs are considerably higher than stand-alone structures. Vissia shared that Earls has to pay for pollution mechanisms to cover the odors from their kitchen and bar. In addition, they’re typically much more labour intensive, as staff have to follow organic recycling protocol from the city, get rid of grease so the smells won’t disturb the residents, and walk five minutes away to take the garbage out. Loading is also a concern, as everyone has to share the same space.

Despite these challenges and higher cost of operation, Vissia says Toronto’s location in a mixed-use building is one of the highest grossing stores, and that 50% of the restaurants they plan on opening will be of this same format.

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Mixed-Use Development Grows in the Suburbs (2016-05-19)

Posted By Administration, Tuesday, November 12, 2019

Mix-use buildings have become a means to fix density issues, supplying residents and tenants with the homes and commercial spaces they need to live, work, and play all within the same square footage. In Vancouver, one of the first to try this method in a busy urban center was the former Chapters location on Robson and Howe. And though many thought residents would be upset over the high traffic and noise, the model proved otherwise, as soon some of North America’s largest retailers followed suit.

“In the mid 2000’s, it took a long time to convince Whole Foods to go into the Cambie/Broadway location,” says Tim Grant, Vice President of PCI Developments. “Now it’s one the busiest locations, and since then the retailer has opened more mix-use locations throughout Greater Vancouver.”

As the city’s notoriously expensive residential market continues to reach well past the $1 million mark, suburban municipalities have become in high-demand, and many of which are transforming into their own busy metropolis. To accommodate this growing population, mix-use developments are thought to embody all of the elements a community needs to counteract the rise in congestion. These cities have become highly attractive to developers; not only do they offer less caps than Vancouver, but they also have bigger lot sizes and high density.

One of these is the City of Burnaby. Now connected with the Evergreen Line, many of the province’s biggest developers are quickly adding to the once-bare skyline, including the Onni Group, Beedie, and Bosa. In the past year, a new Whole Foods location has opened as the anchor tenant in the SOLO District by Jim Bosa’s Appia Development.

Surrey is also becoming a mix-use hub, with communities like the 10-acre Morgan Crossing in South Surrey offering a wide variety of tenants, including Suki’s Salon and The Gap Outlet, with residential units on top. 

Meanwhile The Hub at King George Station by PCI Developments Corp. is designed to transform the evolving downtown core of Surrey. Adjacent to the Expo Line’s King George Station, the second phase will be a 750,000 square foot mix-use retail and entertainment tower with additional office and residences. 

Though Tim Grant and Daniel Lee, Principal from Northwest Atlantic, still believe Vancouver remains the most desirable destination to develop these types of buildings, mix-use is quickly rising in the GVA suburbs. However, Grant notes that developers will have to still adapt to the mix of urban/suburban, nothing that pay parking will not be accepted by the city councils – a very different attitude compared to Vancouver. 

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Vancouver Real Estate Prices: Is Foreign Investment to Blame? (2016-06-14)

Posted By Administration, Tuesday, November 12, 2019

Flip through any newspaper or Twitter feed, and you’re bound to find Vancouver’s real estate market a permanent fixture in the headlines. Housing prices rose 25% every year, coupled with commercial rates that are also skyrocketing. Affordability has therefore become a growing concern for residents who are no longer able to live and work in the cities they once grew up in.

The cause of this real estate bubble leads many to point the finger at foreign ownership. Chinese investors are said to be buying up homes and commercial properties, only to leave them empty and vacant. Meanwhile, residents are being pushed out further and further into the suburbs. Municipalities such as Burnaby, New Westminster, Maple Ridge and Pitt Meadows are experiencing record setting listing prices. Most recently, Abbotsford has garnered attention as the newest suburb to enter bidding wars.

Brian Lee Crowley, Managing Director of Macdonald-Laurier Institute and Political and Economic Commentator, has a different explanation as to what’s driving prices. A native of North Vancouver, Crowley is a serial think tank entrepreneur and national thought leader. He is the founder of the only independent national think tank in Ottawa, the Macdonald-Laurier Institute (MLI), recently ranked one of the top three new think tanks in the world. In addition, he’s a columnist in both the Globe and Mail and Ottawa Citizen, a best-selling and award-winning author, an advisor to governments, industry and international organizations and frequent commentator across all media.

As the speaker at our May Breakfast Event, he shared insights on what he feels is really causing the problem.

“We simply don’t know enough to say for sure that foreign investment is the cause of the affordability crisis,” said Crowley. “The balance of probability tells us that Chinese appetite for expensive properties in the downtown core and the million dollar two-bedroom home in East Van is highly improbable. These issues are not because of Chinese carpetbaggers.”

Instead, Crowley said it comes down to systemic failures, blaming poor governance over public policy that’s “controlled by urban elites who force their ideals on Canadians.” He continues that these policies are restricting supply to create demand and using Chinese investors as a means to distract us from what’s really going on.

Crowley believes that policy makers restrict land supply, which only increases commercial and residential prices. Half of the cost of a home is attributed to the restrictive land use regulation, which in turn drives up rates like never before.

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Public Transportation vs. Driving: What’s the Answer? (2016-06-14)

Posted By Administration, Tuesday, November 12, 2019

In 2008, the B.C. government announced a new Provincial Transit Plan that would invest $4.75 billion over 12 years into developing public transit infrastructure. This includes nine high-capacity bus routes, 1,500 clean energy buses, and major rail expansions for the SkyTrain, Millennium, and Canada Lines. Eight years later, and these developments are still a question mark. In fact, just recently Vancouver was ranked as the worst city in Canada for traffic congestion, and 20th worst in the world. 

Reducing the number of cars on the road and increasing the number of people on transit has always been linked to personal, environmental, and societal benefits. Besides less air pollution, fewer deaths and injuries from crashes, and less stress caused by commuting, taking public transit also leads to financial gains. Costly fees such as parking, insurance, and maintenance are just a few of the costs associated with driving. According to a recent article in The Vancouver Sun, Metro Vancouver’s transportation plan will end up making 70%, or 1.75 million residents, healthier people overall.

For commercial real estate, having accessible transit has major impacts on the price per square foot, pedestrian traffic, and attractiveness to tenants. And with residential prices forcing many working professionals to move outside the city, nearly 90% of new office construction outside of Vancouver will be within 500 meters of a transit station to accommodate commuters. This further exemplifies the dramatic shift of a car culture to a transit culture, affecting the way we live, work, and develop new properties.

Yet despite the societal and economic benefits public transit is said to have, Vancouverites still voted no to the 0.5% sales-tax hike for the transit plebiscite, an increase that would help pay for $7.5 billion worth of new transportation. And according to Brian Crowley, this was the right call.

“It’s become unfashionable to become pro-car,” said Crowley. “But the truth is, the car builds the economy. Places like Ikea and Costco would not be in existence had it not been for the car.”

Crowley believes there is an incorrect assumption that urban centers have more jobs. He further states that mass transit is poorly designed and very expensive, suggesting that “we’re better off buying people cars and fixing more roads” than building another Skytrain route.

An example of how the car culture has actually led to less traffic and more efficiency is in Phoenix, Arizona, which was the 10th worst place for congestion in the U.S. Now it’s dropped 27 places, sitting at #37, all due to a major road-building program. Therefore, the future of Vancouver’s congestion lies in better road planning and driverless cars, giving residents the benefits of stress-free driving on their commute to work.

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Audio Recording of May Breakfast Event: Vancouver Real Estate Prices - Where Do We Go From Here? (2016-06-28)

Posted By Administration, Tuesday, November 12, 2019
We are pleased to be able to provide this audio recording of our May 26th Breakfast Event, featuring Brian Lee Crowley.

What do falling oil prices mean for the Vancouver commercial real estate market? How is foreign investment going to continue shaping the local industry and economy? These are just a few of the hot topics Brian Lee Crowley addressed.

Listen here.

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Moving Out: Small Businesses Feel the Real Estate Crunch (2016-06-28)

Posted By Administration, Monday, November 11, 2019

Kitsilano, the West End, and Mount Pleasant have always been known for their eclectic mix of shopping and restaurants. With a focus on growing small businesses, these key corners of the city are what give YVR its character and contribute to our local economy. And while many entrepreneurs have been attracted by the affordable rents and high-traffic corners, these blocks that are commonly made up of mom and pop shops may soon become a thing of the past.

Why? Because of redevelopment. Many of the older stores are being torn down and restructured for more modern spaces or mixed-use buildings. As a result, the once affordable rents will be far out of reach. In addition, it could take years for the project to be completed, which means owners would be forced to temporarily shut down while construction took place. As a result, many smaller operators seeking to relocate. The only problem is, where?

Many are going east. Main Street is still reasonable for smaller businesses, ranging from $40 to $60 per square foot. As for Kitsilano, Jane McFadden, the executive director of the Kitsilano 4th Avenue Business Association, shared in The Vancouver Sun that while their motto is “Shop local, shop West 4th”, many in the 2300-block are getting pushed out.

For years, Robson Street has been Vancouver’s most sought-after location for retail. Fashion-focused with high-traffic, it demands an average of $200 per square foot. Independent stores simply can’t compete with those rates, which are why these popular blocks are filled with chains like Forever 21, Zara, Banana Republic, and Aritzia.

And while many may blame redevelopment, new construction has also provided opportunity. Many developers are introducing mixed-use buildings, which offer direct traffic from the residents who share the building. The City of Vancouver has also placed restrictions on the size of retail to encourage an active streetscape in an effort to prevent large box stores from overtaking smaller retailers.

According to a study by LOCO BC, small businesses are incredibly important for the BC economy. When residents shop local, 33% of the revenue directly recirculates into the province, compared to 17% for multinational counterparts. This represents a 77%-100% economic advantage. In addition, every one-percent increase in local shopping translates into more than 3,000 new jobs and $94 million in wages.

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