Is Yaletown Losing its Lustre?
Yaletown is facing rising office vacancy and negative absorption, as Gastown and Mount Pleasant emerge as attractive alternatives. But Avison Young’s Robin Buntain explains why he has faith in the venerable submarket.
Vacancy (7.1%) and total vacant space (150k SF) in Yaletown is at its highest point since mid-year 2009, owing to a series of high-profile departures, Andrew notes. Sony Pictures Imageworks left 1128 Homer St (below) for a new HQ at 725 Granville (part of Pacific Centre's redevelopment) and DeNA Group closed its studio at 860 Homer St in a restructuring effort. QuickMobile vacated 1008 Homer St to sublease at 1177 West Hastings St, while Avigilon Corp is decamping from 858 Beatty St for recently acquired 555 Robson St.
Yaletown—boasting character-infused heritage architecture, proximity to downtown and Canada Line service—will endure, Robin says. But target tenant groups in creative and tech industries are being drawn to similar product in Gastown (“a bit safer than it once was”) and Mount Pleasant, a semi-post-industrial area that’s had an uptick in development and leasing thanks to zoning changes. “There’s lots of demand and buildings being built there. (Yaletown has no new construction). So it's been an interesting shift.”
Class-B vacancy in Yaletown is up to 8.3% from 5.1% a year ago, and Class-C vacancy has more than doubled to 10.8%. And first-half 2015 saw the lowest absorption (-89k SF) since Avison Young started tracking Yaletown in 2000. Still, Robin isn’t fretting. There are new opportunities for tenants to get into the marketplace that otherwise haven’t been able to “because all the large blocks had been spoken for.” Like animation studio Animal Logic, which opened a 47k SF operation at 840 Cambie St (above).
Animal Logic's new space had been occupied by Microsoft (which, along with Sony Picture Imageworks, is moving to 725 Granville). United Front Games took 17.5k SF at 1128 Homer, and Coho Data has moved into 22k SF at 1110 Hamilton St. And Robin hints Avigilon’s soon-to-be vacated 60k SF space at 858 Beatty (above) is attracting plenty of suitors. “It’s not often you get floor plates with 30k SF of nicely improved office space in Yaletown, or even downtown."