Broadway’s future
Avison Young reports that the submarket registered its first year of negative absorption since 2003 in 2013, and vacancies climbed to 5.1% at year’s end from 3.3% a year earlier. Consolidation of space and downsizing among tenants accounted for much of the bad news, and deal velocity remained low – a trend expected to continue in 2014.
Better transit access can improve markets for commercial tenants, however, which makes a report by an Urban Land Institute (ULI) panel regarding the proposed rapid transit line along Broadway to UBC of some interest. The report won’t be available till late March, but the panel’s criteria promises some trenchant commentary.
Broadway is the province’s second-largest office market. KPMG prepared a report last year for the city and UBC regarding the corridor’s economic potential that bills it “the busiest bus corridor in North America.”
ULI panellists are assessing the corridor bearing in mind the city’s vision for transit corridors – as set forth in principles for the Cambie corridor – and its own criteria for successful development around transit.
A shared goal is providing – in the city’s words – “a range of housing choices and affordability,” that (in the ULI’s lingo) encourages “every price point to live around transit.”
Most interesting, however, is the ULI’s silence on specific uses.
While these are to be mixed – “but not necessarily in the same place” – and retail space is to be determined by market forces, the city specifically prioritizes job space among the diverse uses sought for transit corridors.
Broadway’s job space is linked in the KPMG report to the tech sector, specifically life sciences. The partnerships required to foster these within a corridor bookended by UBC, Vancouver General Hospital, and the hub of digital enterprises rising around Great Northern Way will no doubt warrant attention from ULI, which touts “the Power of Partnerships” when it comes to successful transit developments.
Slow times
Housing starts are set to rise across the province this year, Canada Mortgage and Housing Corp. (CMHC) forecasts.
But while regional economist Carol Frketich feels the development marks a strengthening in development prospects, the current outlook is not as robust as a year ago.
A year ago, CMHC forecast housing starts of 28,800 units for B.C. in 2013; this year, the outlook for 2014 calls for 27,800 units, and that forecast is itself 100 units short of the 2014 forecast delivered at CMHC’s annual housing outlook conference last November.
The good news is that housing starts are forecast to remain stable at 2014 levels in 2015, too.
Frketich positioned the outlook as positive relative to the actual number of starts in 2013, which was 27,054 units. However, with full-time employment gaining at the expense of part-time jobs, she believes the fundamentals indicate a resurgence in home-buying.
“A shift toward full-time employment from part-time employment tends to be a leading indicator of housing demand,” she said.
Meanwhile, in Vancouver, a cautious forecast indicates that housing starts will remain steady with 2013, when 18,696 units were begun. The forecast calls for 18,600 starts in 2014 and 18,400 in 2015.
The paring back of starts is in line with a market Frketich said is well supplied with resale product. However, the gains in full-time employment will help advance single-family construction. While single-family homes in Vancouver rank among the country’s most expensive, the appetite for resale product is strong.
Real Estate Board of Greater Vancouver figures indicate that steady resale activity saw the benchmark price strengthen in January, rising to $606,800. The increase represented a marginal gain of 0.6% over the December 2013 benchmark, but the strongest increase since June 2013.
Comparison shopping
It pays to compare: a glance at Cushman & Wakefield Ltd.’s year-end retail reports for both 2012 and 2013 shows little change from year to year.
The only neighbourhood to see its most affordable retail rents rise was Kerrisdale, where rents shifted from $25 to $50 a square foot at the end of 2012 to $30 to $55 a square foot a year later.
Chinatown-Gastown, Metrotown, North Surrey and Robson-Burrard were the only other markets to see an increase last year, with the upper limit of rents rising $5 a square foot in each area.
