Office tower an $80-million bet on future of B.C.’s tech sector
Vancouver property developers are posing a big question right now: If they build shiny new office towers downtown, will tech-sector tenants fill them up?
Reliance Properties launched on Wednesday its $80-million bid that they will, declaring that the firm will start construction on a 13-storey high-end property at Burrard and Drake streets, aiming to be complete by early 2020, the first of five new office projects at some stage of development downtown.
Reliance is breaking ground without the comfort of an anchor tenant to back it up at the start.
“We have had the opportunity to kind of pick our time,” Reliance CEO Jon Stovell said.
The site was zoned several years ago as part of a bigger one-millionsquare-foot Burrard Place development, but “we really are picking this moment (because of ) the market conditions, thinking it’s the right time to move ahead.”
Downtown Vancouver’s office vacancy has crept down to 5.2 per cent despite the addition of seven new towers downtown.
Stovell said Reliance has experienced shrinking vacancy in its own office buildings, with tenants growing out of spaces and few options to move.
Stovell added that Reliance has already identified some of its existing tenants who might like to move into the Offices at Burrard Place building, as they are calling it.
“We don’t see any reason why Vancouver won’t absorb all the office space that is coming online,” Stovell said.
Big tech firms have already been taking up a lot of space in other buildings being developed.
Last November, Amazon announced it had signed a lease to take some 150,000 square feet in a yet-to-be-built nine-storey office building being developed by Oxford Properties at 402 Dunsmuir. That was part of the company’s plan to expand its local workforce by 1,000.
For leasing agent Colliers International, the continuing growth of B.C.’s tech sector has changed the complexion of downtown’s officeleasing market.
“I’m born and raised in Vancouver and it’s unrecognizable to me,” said Maury Dubuque, the managing director for Colliers in Vancouver.
Dubuque said he is old enough to remember when professional services firms such as accountants, lawyers and engineers, along with resource companies, ruled downtown’s leasing market.
Today, “it’s global and local tech firms (that) are leading the growth,” Dubuque added, and with a projected six per cent growth rate in B.C.’s technology sector, he anticipates the Burrard Place building will be mostly full by completion.
With shrinking vacancy, Dubuque said rental rates have increased by up to 20 per cent over the last year and demand downtown continues to be steady.
His leasing agents regularly talk with biotech companies and firms working in artificial intelligence both locally and from across the border.
“I think we’ve got a bit of a run,” Dubuque said.
Whether technology companies do fill new buildings depends on the type of tech companies, said Glenn Gardner, a principal at commercial real estate firm Avison Young.
“We usually find the more established companies tend to be in the newer, nicer buildings,” Gardner said.
However, Gardner said the tech sector has been the most vibrant player in the local office market, looking for space all over the city from downtown and Gastown to Yaletown and Mount Pleasant.
“What we find is that all companies are trying to essentially do the same thing,” Gardner said, “which is to attract the best talent, and one of the ways you can attract the best talent is with the best office space.”
Stovell said the Burrard Place office tower, with a curving glass facade, is the last commercial office design by star Vancouver architect Bing Thom.
The larger Burrard Place concept envisions up to one million square feet of mixed-use space including two residential highrises, which Vancouver acting Mayor Raymond Louie characterized as the “kind of smart growth that defines forward-thinking cities like Vancouver.”