Exchange Tower heritage section to become hotel
It’s a better use than office space, say developers of the 202-room facility
The developers of the Exchange Tower, one of Vancouver’s newest office towers, have announced that the historic section of the building will be turned into a hotel instead of work spaces.
Executive Hotels & Resorts will operate a 202-room hotel on 10 floors of the circa-1929 heritage portion of the Old Stock Exchange building, which is being restored as part of the newly constructed Exchange Tower project.
Credit Suisse Asset Management and SwissReal Group are co-developing The Exchange, which also includes a class-AAA office tower at the corner of Howe and West Pender streets.
Executive Hotels and Resorts approached commercial brokerage firm Avison Young with interest to set up a hotel in the building, said Bob Levine, a principal with Avison Young in Vancouver.
“The tenant came to us and hired us to try to negotiate a deal there,” he told The Sun. “They came to us about a year ago.”
He said the owners of The Exchange had not initially considered putting a hotel in the space.
The Exchange is a $240-million, 31-storey office tower that includes Canada’s first LEED Platinum heritage conversion.
Swiss architect Harry Gugger designed the building with Iredale Group Architecture of Vancouver. The Exchange office component is slated for completion at the end of 2017 with 165,000 square feet available for lease.
The hotel’s interior leasehold improvements are expected to begin this fall.
The ownership group is pleased with the change from office space to hotel rooms, said Herbert Meier, project manager at Credit Suisse. “In fact, the proposed hotel concept is ideal for the heritage part of The Exchange with its smaller windows and limited ceiling height,” he said.
The office will have its own entrance from West Pender Street with its own bank of elevators, while the hotel will have its entrance on Howe Street, also with its own elevators, Meier said in an email.
Levine said the downtown hotel market remains “very tight” and in need of more rooms.
The Vancouver Board of Trade and the Downtown Business Improvement Association provided letters of support for the change of use in the building, Levine said. “They were all very, very positive about the need for more (hotel) rooms.”
Meanwhile, work continues to lease the office space in the new tower, which is expected to be complete by the end of this year.
“We’re pretty close to 60 per cent (leased) now,” said Mark Chambers, a senior vice-president with JLL in Vancouver, the building’s leasing agency.
He said Smythe LLP chartered accountants have signed a lease to establish their 28,000-squarefoot headquarters in the building. A local fintech company that is expanding from its existing office will occupy another 22,500 square feet.
In 2015, The Exchange signed anchor tenant National Bank to take up about 45,000 sq. ft. Swiss chocolatier Lindt will operate a retail store on the ground floor.
The Exchange Tower has been the focus of scrutiny in the local commercial real estate community over its lease portfolio in a market facing historically low office vacancy rates.
Vancouver office vacancy rates last spring were 12.5 per cent, according to numbers provided by JLL. This year, office vacancies have dropped sharply to 7.1 per cent, making Vancouver one of the strongest office markets in North America.
Chambers said it’s unfair to label the Exchange’s lease-up as sluggish. “We knew we were following up a first wave of new (office) construction that we’ve seen in a long time,” he said. “You always want to be further ahead, but I think we’re bang on where we had sort of anticipated.”
He said the building got “lumped in” with a wave of new office towers that delivered in 2014 and 2015. “We’re talking about a fourth quarter 2017 delivery (for the Exchange Tower), so it’s delivering into its own wave of construction.”
The developers are pleased with their current leasing situation, given that they hadn’t pre-leased the building, said Franz Gehriger, president and CEO of SwissReal Investments.
He said the developers did not have a group of existing tenants in the market who could be relocated to the new building. “We had a lot of advice, and we saw that three or four buildings went ahead about two years before we started,” he said.
“This was exactly the gap we expected. These buildings which have been developed in the last four or five years are completely leased out,” Gehriger said. “That’s a fortunate situation and what we expected.”