'A Lot of New Inventory to Absorb'
Vancouver's in the throes of the largest office development cycle it’s ever seen, and “everyone’s guessing and waiting to see what it’s going to mean,” says CBRE EVP and B.C. managing director Norm Taylor (not realizing he just rhymed there.) There is over 2M SF of new office space slated for completion in the next 18 months, according to CBRE. And while Norm tells us the market has witnessed record office rental rates—and that Vancouver remains “persistently popular” with investors and tenants in the afterglow of the 2010 Winter Olympics—“that’s a lot of new inventory for the market to absorb.”
Among the first of the new offices to open in 2015 is MNP Tower (pictured). The building is 76% leased, with occupants including MNP (72k SF), Atimi Software (40k SF), and CBRE itself taking 24k SF. Other buildings, like 745 Thurlow (89%), 725 Granville (91%) and Telus Garden (98%), also are substantially pre-leased. There's strong demand for new buildings in a flight to quality, given the bulk of the existing downtown inventory is 40-plus years old. Norm notes that rental rates for existing inventory reached their peak as the office projects got under construction. “Now it’s a question of what’ll happen to rates once all the new supply hits in 2015.”