By Peter Mitham
January 10–16, 2012
Colliers International says growing interest in suburban office space may bear fruit for landlords this year if numbers regarding the market’s standing relative to Vancouver are any indication.
Tours of office space last year were common occurrences, but few companies made the move.
“There’s very little movement that took place in 2011 when there was a lot of interest and a lot of tours,” Courtney Markle, research director for Colliers in Vancouver, said last week. “We predicted that they would make more movement than they have. It’s difficult to be accurate in that forecast.”
The numbers are clear, however: The per-square-foot net rent for triple-A space in downtown Vancouver averages $33.92, up 43.1% from five years ago. C-class space is up 48.7%. Rents in Burnaby, meanwhile, are half what they are in Vancouver and have risen just 30% over the past five years.
“With the rare differential and limited spaces available, tenants are becoming frustrated and beginning to look elsewhere,” Colliers reported. “If there is ever a time when companies will consider a move from downtown to the suburbs, it will be over the next two to three years, until downtown new supply is delivered.”
Restless companies eyeing Burnaby include the back office departments of banks and financial institutions – HSBC plans to consolidate a portion of its staff at the Broadway Tech Centre later this year – as well as pension funds, foresters and miners.
Colliers reported that Metro Vancouver office vacancies ended the year at 7.4%. Downtown Vancouver
vacancies are running at 3.5%, while suburban vacancies are at 11%. All areas reported slight increases
in vacancies, Colliers said.
BC Assessment reports that valuations on properties in Whistler have dropped an average of 15% from
a year ago, a phenomenon consistent with what Rob Palm, executive director of the Real Estate Association of Whistler and a broker with the Whistler Real Estate Co., has seen on sold properties.
One-bedroom properties are now available from about $295,000, whereas a year ago the starting price
would have been $350,000. Similarly, a two-bedroom unit is available from $400,000, not the $475,000
buyers would have been looking at in 2010.
The drop has spurred sales activity, which has helped whittle down listings. There were 550 sales in 2011, up from 462 in 2010 and not far from the five-year average of 569 sales. Sales of condos and townhomes have been particularly strong, increasing 39% and 20%, respectively.
But anyone looking to the Olympics for an influence will come up empty. “I don’t think that the Olympic factor was as much of a factor as people thought it would be,” Palm said, while not discounting the role infrastructure such as highway improvements have played.
But the highway has merely helped traffic flow between Whistler and Vancouver, from whence 65% to 70% of buyers hail. And what they’re coming for is the value.
Many have cashed out of Vancouver and North Shore properties, Palm said, and used the proceeds to downsize in Vancouver while buying a primary residence in Whistler – often a chalet, townhome or two-bedroom apartment.
"We’re probably more affordable today than a lot of markets, and they’re starting to see the value,” Palm said of buyers.
Crowds, not clouds
Preparations for the release this spring of units in Canada House at the Village on False Creek (formerly known as Millennium Water) are under discussion. But if a new year underscores anything for the muchmaligned development, which remains a hot political potato, it’s the attraction the place had for revelers welcoming 2012.
A couple of hundred people lined the waterfront at midnight, watching fireworks spark off the Plaza of
Nations. A lone trumpeter played a sad reveille for the dawning year as party yachts steamed by.
While not apparent from West First Avenue, the activity was a vindication of marketer Bob Rennie’s proclamation last February that the cloud over the Olympic Village was finally lifting.
The village is a ghost town no more, with all but the presentation centre – or 91% – of commercial space leased to long-term tenants, and 70%, or 452 of the 644 available units sold.