Office occupiers are burning with desire to own their own space. Colliers International's Vancouver executive managing director, Kirk Kuester, explains the attraction.
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“It’s a hedge against a tight market that’s only going to become more challenging and expensive," says Kirk, noting strata-titled ownership of office-warehouse product has been common for years, but is shifting into the office realm, propelled by low interest rates, limited supply and increasing lease rates for new space. Demand for strata office isn’t coming from institutional investors or big corporate players, more from private equity and professional services firms that would be paying big rents to get into newer office buildings. Buying space can be cheaper (given the current cost of capital) and it helps build equity; plus it gives occupiers greater control over design and their individual occupancies.
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Calls for strata office—aka office condos—are being answered by a handful of projects, including 34 West 7th, a 54k SF building developed by Chard (above) that Kirk’s team will soon launch. Reliance Properties / Jim Pattison Group's One Burrard Place, a 60-storey tower (the city’s third-tallest), has 60k SF of strata office. The activity also has been spurred by a growing acceptance of strata office in Vancouver’s secondary market. “If an owner or investor wants to sell in order to upside or downsize," says Kirk, "there’s now a very liquid market to sell into that didn’t exist two or three years ago.”
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Above is the Foster + Partners-designed Jameson House, whose strata-office space has successfully resold in several instances, evidence of the secondary market’s strength, according to Kirk. “And we continue to field calls from occupiers looking for these kinds of opportunities.” His team soon is launching a 250k SF project in Richmond opposite Landsdowne Centre that'll include strata office. That's alongside another strata office development coming to Metrotown in Burnaby. “We’re expanding our focus and resources to support this product type,” Kirk says. “It’s a meaningful alternative to the occupier and it's not going away.”
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