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February 17, 2014
Should You Fear Surrey's Office Vacancy?
Surrey office vacancies (17.3%), are the highest since mid-year 2005. Add in the greatest negative annual absorption since 1997. But is it really that bad? (You can send your responses to the panic room we're vacationing in.)
Put it in perspective, says Avison Young's Darrell Hurst, who plucked the numbers from AY's recently released metro Vancouver office report. New office space was added to the city's inventory (like the Centre of Newton, Phase II). And three large relocations drove the market: the RCMP vacated three private sector buildings (150k SF total) for new government-owned digs; Coast Mountain Bus Co relocated out of Station Tower (80k SF) to its new tower in New Westminster; and Westland Insurance also moved.
Then there's an overall softness in the economy, which led companies to "delay new hirings and put off expansions,” Darrell says. Still, AY sees it as part of a cycle, and Darrell says the firm is seeing tremendous interest in the new City Centre. All the infrastructure and amenities that will come with that development will bode well for future office space demand in Surrey. Pictured: the new Gateway Place project, set to start in 2014.
Office Deal Profit Turns Heads
RealNet's Paul Richter had an exciting stat on Westsea Properties' headline sale of the Royal Bank Building at 618-634 6th Ave. The building sold for $32M—a 101% increase from what the seller bought it for in 2007. (It's the extra 1% that really gave spectators some whiplash.) Local private investor Lezam International snapped up the property at a number close to the values per square foot the downtown Vancouver market's been experiencing, he says.
Fish Tales: My Bucket List
Grosvenor Americas SVP Glenn Barrick says just visiting the Haida Gwaii—also known as the Queen Charlotte Islands—was on his bucket list. Growing up in Ontario, he'd fished two or three times but never on Canada's west coast. At the Rick Hansen Fishing Challenge at Langara Fishing Lodge, he got an initiation. “During the first two days of the tournament, I caught a few fish, saw some whales, and was in complete awe of the scenery,” he tells us. On Day 3, the last day of competition, he hooked something major. “My guide Takao saw it jump and informed me that it was a big one,” he says. It took 25 minutes to get the Chinook salmon into the boat—all 42.5 pounds of fish. Glenn was the rookie champion of the tournament. At work, Glenn's been working on the development of Grosvenor's Ambleside mixed-use project on Marine Drive in West Vancouver, set to break ground.
Fish Tales: That's Not A Snag
Colliers GM Rob Whitworth is not one for putting. “I'd rather spend an afternoon losing gear on a river or fly fishing on a lake,” he says. The enthusiast describes one sunny afternoon fishing with a colleague on the Fraser River. After setting up the gear, he made his first cast out about 75 yards, the first time using a level wind reel.
“I felt a good pull, and thought I had a snag,” he says. But it wasn't a snag. It was a 26-pound spring salmon. By the early afternoon, they'd hooked another 19-pound spring salmon and their limit of sockeye. “Sounds like a good fish tale, but it's all true,” Rob says. “It beats golf any day of the week.”
Warehouses Are Where It's At
Distribution warehouses are fast becoming one of the more popular asset classes, thanks to online shopping (and our childlike fascination with forklifts). One active company is Home Depot (its Kelowna store pictured), which just opened the first of three DFCs planned in the US over the next two years. But there are no similar plans in Canada just yet, according to Home Depot spokesperson Erika Botond.
If that's the case, it may want to rethink that, says DIG360 Consulting Ltd founder David Ian Gray, a retail analyst. “In my opinion, direct fulfillment is the crux of online,” he says of the rise in e-commerce. Without it, smooth, efficient, and profitable online operations will be challenged.
Straw poll: The cost to host the 2010 Winter Games in Vancouver was around $8B. Sochi—if you believe the reports and factor in infrastructure upgrades—is $52B. Are the Games and their growing scale sustainable? Send your thoughts to mark.keast@bisnow.com.
