Residential and office complex will become city?s third-tallest building
? SCOTT NEUFELD
The Vancouver Sun
Work is underway on Vancouver’s latest multi-tower office and residential project on Burrard Street, which will add nearly 250,000 square feet of office space to the downtown market that has maintained a low vacancy rate, surprising experts amid a rush of new office projects over the past two years.
Burrard Place is set to eventually become a four-tower complex set around Burrard, Hornby and Drake streets. It will include two mixed-use residential and office buildings; a 13-storey rental office building that will also include a multi-level Toyota dealership; and a fourth 25-storey rental apartment building at Hornby and Davie streets that is now in the rezoning phase.
The $500-million complex is being co-developed by Pattison Group and Reliance Properties Ltd, and will include a total of 250,000 square feet of strata and leasable office space, said Jon Stovell, the president of Reliance Properties.
In all, the four towers would add about 1.1 million sq. ft. of residential and commercial space to the neighbourhood, Stovell said.
“Most of what is going up right now — whether it’s Credit Suisse’s (Exchange tower) or the MNP Tower, or the new tower by Morguard at 601 Hastings — pretty much all of them are dedicated office buildings,” he said.
Stovell said Burrard Place will become a mixed-use complex with hundreds of workspaces, homes and various amenities enjoyed by the owners and tenants that could help to transform that section of downtown.
“It’s a complex. It’s a whole block of the city as opposed to just a building on its own,” he said. “It’s integration that we’re seeing.”
Ground broke on One Burrard Place in May 2016. The tower will climb to 54 storeys, making it the third tallest in the city after Shangri-La and Trump Tower. The footings for that building are now being excavated with a building completion date expected in 2020. The tower will include three storeys of strata office space, about 400 condos and rental apartments, 30,000 sq. ft. of amenities, and street-level retail.
Stovell said the strata office component is already sold out, fetching about $1,300 per square foot across 45 units.
Meanwhile, the 13-storey office tower is set to begin construction in April and will include about 200,000 sq. ft. of rental offices and a Toyota car dealership housed in five storeys below ground and three storeys above grade. That building is expected to complete in mid-2019.
Two Burrard Place, a mixed-use residential, office and retail building will come later, followed by Three Burrard Place, a 25-storey rental apartment building, which is in the rezoning process now.
The work begins as the area’s office vacancy rate creeps down. Many market observers and stakeholders had expected downtown Vancouver’s office vacancy rate to shoot up to 12 per cent or higher by now, kicked wide open by more than 2.2 million sq. ft. of new office space that has opened over the last two years.
But the vacancy rate has actually declined over the past 12 months, and is now at about 7.8 per cent, according to Avison Young’s mid-2016 Metro Vancouver Office Market Report.
The most recent office projects to join the fold are: Serracan Properties’ FiveTen Seymour, which was almost entirely leased in advance of its completion, and Century Group’s Ormidale — also entirely pre-leased by Regus for its new co-working project called Spaces. One outlier in the downtown market has been the 31-storey Exchange building by Credit Suisse/SwissReal Group, which is set to complete this year but is only 10 per cent pre-leased by National Bank.
Reliance hired Colliers International to find tenants for the tower containing the car dealership and rental offices.
“We put some preliminary feelers out with some large professional services firms, just trying to test the waters and see what kind of reaction we’d get for the location,” said Maury Dubuque, Colliers’ managing director in Vancouver. He said the leasing process for that building has just begun. “It’s been overwhelmingly positive.”
He agreed that the overall office market downtown has defied expectations, given all the new and proposed builds.
“A year ago, it would have been my prediction that by the end of the year it would be somewhere around 12 per cent [vacancy]. No question. Were we surprised? Sure,” he said. “There’s a lot of excitement about the next development cycle and I think there will be strong demand for it.”
Dubuque said Burrard Place would likely tap into demand being led by a mix of small to mid-sized professional services firms and architects, engineers and tech companies.
“A huge amount of that demand is coming from the tech sector,” Stovell said. “We had a building downtown that just came up — a full building, and we had numerous offers from tech tenants for the full building within days of it going on the market.”
He said Burrard Place could end up attracting tenants from nearby locations. “There’s a whole suite of tech tenants in Yaletown and they’re initially attracted to that stick and brick, which we love and have a lot of in Gastown, but they eventually realize [those spaces] are inefficient,” he said. “They’re on two floors, or three floors and then they start to move into more modern spaces.”
He said there could also be a migration downtown to fill the new buildings from across the bridges on West Broadway.
“We expect to be some resettlement from Broadway as people decide to wait out the construction of the Broadway SkyTrain line,” he said, noting there could be a lot of disruption there if that line goes ahead as planned.
Ultimately, landlords who have been flexible on their asking rents have not had a problem attracting new tenants to these new offices, Stovell said.
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