Office tower construction marks change of attitude for Vancouver’s core
FRANCES BULA
The boom times failed to lure corporate offices to downtown Vancouver – but the recession has succeeded in resurrecting corporate towers and dispelling fears of a city core transformed into a bedroom community.
Telus Corp., B.C.’s largest private company, is planning to build a major new office tower in downtown Vancouver, the first new project initiated since the early part of the decade. That $500-million development, on a prime downtown street, follows quiet moves from major companies such as Microsoft and HSBC to flee the suburbs and consolidate operations in the city.
And there are currently six other proposals to build towers that are dedicated, with one exception, to office space only.
That is due, in part, to the recession, which has resulted in vacancy rates dropping in expensive central Vancouver and rising in the lower-priced suburbs.
It seems counterintuitive, but that’s the way recessions work.
“In hard times, companies want to cut costs. But you also see that investors flee to quality,” said John Tylee, the policy director at the Vancouver Economic Development Commission, who notes that the
vacancy rate in downtown Vancouver has dropped to 4 per cent from 6 per cent two years ago.
One broker, DTZ Barnicke, noted in its last newsletter that
suburban vacancies have gone as high as 18 per cent in some suburbs like Richmond and Surrey.
Mr. Tylee also said the Canada Line, which gives businesses easy access to the airport, and increasing globalization have also played their part.
“The more links there are between cities in a globalized world, the more businesses want to be in the central downtown,” he said.
The results: Microsoft – whose original landing in Richmond two years ago produced howls of anguish from the Vancouver business community – quietly consolidated its operations into a Yaletown space in October.
BC Lottery Corporation is moving this December, after 24 years, from its suburban Richmond location to the Broadway Tech Centre, near the Renfrew SkyTrain station, to be closer to transit. HSBC also consolidated its back-office operations, formerly in the suburbs, to the same location this year.
Several other digital-media companies attracted to the Lower Mainland from abroad – Sony ImageWorks, Digital Domain, and Pixar – have all chosen central-city locations.
For many, this is all a sign that Vancouver is doing the right things for business and that a lively downtown has attracted them.
“The companies that are coming here, they looked at cities all over the word and it was Vancouver’s work force and talent pool that attracted them. And that talent pool wants to live in the city,” said Mayor Gregor Robertson, who has made it his political mission to try to get foreign companies to consider locating to the city and region.
So, even though downtown office rates are reaching levels of $40 a square foot,
companies are choosing to locate downtown. And that is encouraging developers to build for them.
Mr. Robertson said it was also important to tweak some policies in order to attract businesses. His council changed its policy 18 months ago on how much office space could go into industrial land.
“When we adjusted that policy, that allowed us to land BCLC [the lottery corporation],” he said.
At the Vancouver Board of Trade, economist Bernie Magnan said the best policy change the city made was two years ago, when it prohibited condo development in a large area around the central business district.
“That has put a damper on speculation. Now there is some surety about where buildings can go.”
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