Tech check
The most striking contribution to Urban Development Institute’s January 22 forecast luncheon in Vancouver wasn’t a witty or acerbic comment from the likes of developers Eric Carlson or Rob Macdonald, nor yet a sober assessment of the economy from Bentall Kennedy’s executive vice-president Tony Astles (as occurred last year).
While moderator Diana McMeekin acknowledged that Colin Bosa’s insights on the residential market were what many people were waiting for, it was Mark Betteridge, CEO of Discovery Parks Inc., who highlighted the tech sector as a driver of Vancouver office leasing activity. Tech companies haven’t been front and centre for several years. Electronic Arts vacated four floors atop 250 Howe Street in 2009, while other software and digital media studios typically occupied space in Gastown and the long-time stronghold of Yaletown.
Betteridge sees them moving back to centre ice.
“What I see happening downtown is that the mining industry, as it’s leaving, is creating a lot of sublease space,” Betteridge said. “I believe more of that is going to be taken up by tech companies.”
Startups are looking for cheap, trendy locations, moving into Mount Pleasant and south along Main Street. They’re drawn not just by available space but proximity to transit and affordable housing, and the vibe of the neighbourhood.
“What really matters is the neighbourhood, the location,” Betteridge said. “It’s the amenities and the services that are outside the building that count, at least as much as the building.”
Given that the sector faces a shortage of talent, companies are bowing to workers on location.
“The power is with the individual, the men and the women who work in the industry,” Betteridge said. “They pretty much dictate where it goes.”
Break ground
Some have called SwissReal Group’s planned $200 million redevelopment of the Vancouver Stock Exchange property on Howe Street the canary in the coal mine that is downtown Vancouver’s office market, but the canary’s got wings.
Brokers who assembled on January 23 for a ceremonial sod-turning (really, a sifting of sands in a rectangle cut out of pavement for the purpose) pointed to such things as preleasing of more than 80% of the Telus tower rising a few blocks away as proof of tenant demand.
Citing a strong office market – despite rising vacancies – Mark Renzoni, president and CEO of leasing agent CBRE Canada, said negotiations toward an initial tenant are going well, and he expects an announcement soon.
Indeed, as the city’s office leasing agents have pointed out, the average age of triple-A office space in the downtown core is approaching 25 years, and workers don’t work the way they did a quarter-century ago – a time before widespread use of mobile phones, let alone the BlackBerry and iPhone.
Today’s workers are more mobile andrequire less fixed space than they used to, and companies see opportunities to boost productivity by shifting to new, high-efficiency space.
“Tenants are looking for new, sustainable environments,” Renzoni said. “Vancouver’s downtown is in a building boom right now because tenants are looking for new space.”
Mayor Gregor Robertson was clearly chuffed by the activity, cheering the market for responding to the need for new space while also claiming the achievement for his administration.
“We brought stability to the commercial market downtown,” he said. “This city council has approved as much new office space in the past four years as happened in the previous decade; it’s a big part of our city’s economic action strategy.”
Buildings without workers would be hollow successes, however, and Robertson tipped tech companies as tenants, which, he said, “I suspect will be very visible in this new building.”
Dollar’s worth
Prior to helping shift sand at the SwissReal ground breaking, Renzoni led a panel discussion at the monthly meeting of commercial real estate association NAIOP regarding the industrial market. One of the hot topics was the trajectory of Canada’s dollar. A weaker dollar benefits manufacturers, and in turn industrial landlords, and while panellists dared not predict the future they were definitely pleased with the dollar trading in the range of the postwar average of about US$0.87.
“It’s like catching a falling knife,” said Darren Cannon, executive vice-president with Colliers International. “[But] for now, the trend is your friend.”
“This is really the icing on the cake,” Renzoni added. “It keeps our Canadian economy growing.” •
