New Projects Will Exacerbate Vacancy
Vancouver’s downtown office vacancy rate hit 6.4% by mid-year, the highest level in a decade. So delivery of new projects, beginning later this year, will likely exacerbate the situation as older buildings are returned to the market. There's some good news, though. Avison Young national research director Bill Argeropoulos says the overwhelming majority of space in these new downtown developments (72%) is pre-leased. That's better than in Toronto (the spot Bill snapped this selfie, sporting a sweet beard he grew while camping with his family this summer), where the new buildings coming online are only 56% pre-leased.
725 Granville—the 578k SF expansion of Pacific Centre—was one of the most successful projects of first half 2014, with Microsoft Canada and Sony Pictures Imageworks signing lease deals for a combined total of 265k SF, part of what Bill calls a huge influx of high-tech tenants into Vancouver of late. 725 Granville is slated to reopen in early 2015, helping boost absorption in Vancouver’s core, which saw 421k SF of negative absorption from July 2013 to end of June this year.
