The former Bay department store in Victoria is stocking housewares as Townline Group’s redevelopment of the property concludes and starts welcoming residents.
Completion of 132 homes in the 152-unit building (the remainder, all penthouse suites, aren’t yet complete) marks the end of the first phase of the $80 million project. Townline has yet to secure tenants for the 40,000 square feet of retail space at grade, but Bob Pearce, Townline’s vice-president, development, isn’t worried.
Pearce said Townline hopes to begin the project’s second phase in the new year. The Fisgard Building at Hudson Mews will be a 12-storey multifamily rental project with 120 units. Townline also plans two additional residential towers on site: one 24 storeys, the other 19 storeys, and says it will develop an adjacent site formerly owned by Ontario-based Principle Holdings Ltd. to complete what Pearce calls the two-block “Hudson precinct.”
The activity is a sign of optimism in a market where Pearce believes caution is still warranted.
“It isn’t nearly as strong as it has been. HST, all the little things that affect the market, affect people’s decision-making,” he said, noting that the province’s decision to defer the HST referendum until next year isn’t a settling move.
Speaking of the HST, Townline is awaiting a development permit for the first phase of its Gardens property in Richmond – the former site of anti-HST crusader Bill Vander Zalm’s Fantasy Gardens.
Townline also plans to revive two projects on Seymour Street in Vancouver (one at Davie Street, another at Nelson) that were shelved when real estate markets cooled in 2008.
“[Nelson Street] was very well received at the time,” Pearce said, “and I think we can maintain that now with this market.”
The health of the Vancouver office market was on show in the latest statistics from Cushman & Wakefield Ltd., which were released last week.
With the third quarter coming to a close, office vacancies in Metro Vancouver sit at 8.4% while the rate for downtown and the Broadway Corridor is 4.5%. This is unchanged from the second quarter, but marks stabilization below the 4.6% rate logged at the end of June 2009. (The regional rate, by contrast, rose from 6.9% over the same period.)
The stability reflects renewed strength in a downtown market where vacancies rose significantly through the recession and sublease space became a significant factor. Today, the market awaits news that the Aquilini Group and Bentall Capital LP are proceeding with office towers in the downtown core (Aquilini Group dusted off its plans for a 230,000-square-foot office tower adjacent to Rogers Arena earlier this year).
“There’s certainly reason to believe that for the remainder of this year vacancies are going to remain tight downtown,” said Jeff Rank, managing director of Cushman & Wakefield in Vancouver, noting that lease rates in the core are starting to rise.
On the other hand, double-digit vacancies are common in the suburbs, with a 19.4% rate in Richmond and 12.3% in Burnaby.
“There are certain markets or types of business that do need space and are expanding, but it’s not as widespread to suggest that we’re bucking the trend altogether from the rest of North America,” Rank said.
On the plus side, vacancies in downtown and the Broadway Corridor are already lower than the 4.8% rate that Cushman & Wakefield previously projected for the area by 2011.
Whether vacancies continue to fall depends on pent-up demand, Rank said.
The launch of a new office tower may provide an answer.
“It’ll have a big impact on where vacancy rates will go, where rental rates will go. It will certainly test whether there’s a lot of pent-up demand,” he said.
Tsur Somerville, director of UBC’s Centre for Urban Economics and Real Estate, provided an entertaining if blunt assessment of the state of residential development in Vancouver at the recent Urban Land Institute discussion regarding the city in 2050.
Housing, for starters, is not and hasn’t (in recent memory) been affordable in Vancouver by any standard measure thanks to constraints that include geography and city planning processes. Vancouver has consequently come to prize its dense urban environment.
But Somerville argued that it will have to prize it a lot more if it hopes to accommodate projected growth over the next 40 years.
The question, however, is what will individuals prize as smaller condos become the norm in efforts to keep home ownership within reach?
The public realm, Somerville said.
“They’re finding public experiences that replace private experiences,” he said. “[We] have to find mechanisms whereby we replace private space with public space.”
But of course, the answer just led to another question.
“What kind of public space?”