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  #41  
Old Posted Aug 17, 2011, 2:42 PM
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There are a couple factors at play.

First is absorption rates. Calgary's Vacancy stood at 15% not even a year ago, in the past 12 months 3 million square feet has been absorbed, dropping the vacancy rate below what even the most bullish of estimates called for. Given expected high absorption the rate is expected to drop much further.

Second and more to addressing your question is submarkets. While total Vacancy is roughly 8.5-9% Class A downtown vacancy is 3.7% and is the most supply constrained of any, so it will likely drop to near 0 in the next year or so. Class A vancancies are what cause new office towers, as 99% of new build downtown office space is class A (or AA or AAA depending on what the specific brokerage is calling it). If class A vacancies are low, as they are in Calgary (and Vancouver) it will spur a new round of office development.

As an example Toronto's overall vacancy rate is 10.2%, identical to Vancouver, yet their class A downtown vacancy stands at 9.2%, much higher than Vancouver's 4.5%. This is why you will see relatively more office activity in Vancouver over the next 12-18 months. Over that time Toronto will absorb the class A space and will be ready for another round of new office buildings, while Vancouver will see a lull in activity as it absorbs the new space.

Real estate cycles 101.
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  #42  
Old Posted Aug 18, 2011, 3:23 AM
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I certainly wouldn't gamble on Vancouver seeing more office activity than Toronto over the next 18 months. There are several large RFPs out there which is reason why we are seeing a dozen projects dusted off/updated and aggressively marketed on top of the towers already under construction. There's only a few modest towers being pursued in Vancity with one or possibly two that will break ground. Toronto's market is an elephant to Vancouver's vole and a number of other Canadian submarkets that put Vancouver's 4.5% to shame.

Please don't say you were refering to a highly specific, utterly nonsensical stat such as, for example, percentage increase in inventory. You'll never top Lindsay Ontario's new subway restaurant addition.
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  #43  
Old Posted Aug 18, 2011, 3:29 AM
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^^^yes. while the numbers show more demand in Vancouver, the fact is, that is just percentages. the reality is this. Toronto demand is probably 10 times what is needed in Vancouver, or even Calgary. so you will see much more new office development in Toronto as a result of this.
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  #44  
Old Posted Aug 18, 2011, 1:24 PM
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Originally Posted by WhipperSnapper View Post
Please don't say you were refering to a highly specific, utterly nonsensical stat such as, for example, percentage increase in inventory. You'll never top Lindsay Ontario's new subway restaurant addition.
I literally made a very specific point of saying relative increase. It's quite clear.

And its not nonsensical for local markets, in fact its about the only metric regarding inventory that matters, and gives a true representation about the health of local markets.

Anyway going forward downtown To and Van will add similar amounts of absolute office space over the next 5 years, the GTA vs Metro Van is an entirely different story however as total GTA office growth will dwarf total metro van growth.
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  #45  
Old Posted Aug 18, 2011, 4:24 PM
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Originally Posted by LeftCoaster View Post
I literally made a very specific point of saying relative increase. It's quite clear.
I don't see how this is relevant to how amazing Toronto is, which has been the primary topic of discussion for the last few posts. Maybe you should try the Vancouver section, although that may soon be repurposed as a more useful section for discussing specifically why Vancouver is inferior to Toronto.
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  #46  
Old Posted Aug 18, 2011, 9:36 PM
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Originally Posted by LeftCoaster View Post
I literally made a very specific point of saying relative increase. It's quite clear.

And its not nonsensical for local markets, in fact its about the only metric regarding inventory that matters, and gives a true representation about the health of local markets.

Anyway going forward downtown To and Van will add similar amounts of absolute office space over the next 5 years, the GTA vs Metro Van is an entirely different story however as total GTA office growth will dwarf total metro van growth.

That's true. I'm just so fed up by stats relative to their markets being used as a direct comparable between two separate markets.

Still, I really think you're putting far too much emphasis on vacancy rate and positive absorption. I doubt Bay Street's demographic and work space architecture has ever experienced such a dramatic shift. The major growth sector has been and continue to be dead end low paying jobs. Competition is quite fierce in attracting over qualified, 20 somethings to these positions. One way is through hip, cool workplaces with exposed mechanicals and polished concrete floors in conventional class A space.

Anyways, to make a story short, its cheaper to build new from scratch than to retrofit the older buildings will miles of redundant systems hidden behind ceiling tiles. The lease rates of the new developments outside of "the MINT" are easily 30% less. It's just specualtion but, I do believe Toronto will see a significant commercial building boom even as vacancy rates climb.
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  #47  
Old Posted Aug 18, 2011, 9:46 PM
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Originally Posted by someone123 View Post
I don't see how this is relevant to how amazing Toronto is, which has been the primary topic of discussion for the last few posts. Maybe you should try the Vancouver section, although that may soon be repurposed as a more useful section for discussing specifically why Vancouver is inferior to Toronto.
You seem like a reasonable fellow but yet, have this very jaded view of Toronto. It's almost as you wish it would fail. Many of your posts come off as downright knuckle dragging troglodytes when you look beyond the passive aggressiveness. There are always truths but, the city, its financing, is no where near as dire as you make it out to be. Waterfront Toronto and section 37 community contributions compete very well with the ongoing city building projects in other Canadian cities.
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  #48  
Old Posted Aug 26, 2011, 6:28 AM
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Originally Posted by LeftCoaster View Post
haha I forgot about that little argument, boy has time been my friend on that one.

Vacancy rate of 7.9%, even lower at 6.4% for AAA space. Vacancy is actually supposed to decline when the Bow opens its doors.

The only remaining large block of space left from the Bow fallout is at Encana place, 400,000sf, which considering the over 3 million sf of absorption Calgary recorded LTM Q2, is peanuts.

The Calgary market right now is unbelievable, its running at levels barely seen in the largest markets, recording absorption close to levels seen in NYC, which is having a great year as well.

Vacancy in 2013 is forecast to be in the low 5s on total, much lower for AAA. Expect to see at least 3 major office tower announcements over the next 12 months.
Wow! - this is fantastic - I never dreamed we would be talking of a new office tower (let alone 3) in Calgary even a year ago.

I wish we could trade the 3 - 500 footers for one 900+ footer though.
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  #49  
Old Posted Aug 26, 2011, 9:33 AM
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sure, encanas old space is leased. but where will the companies moving into their old offices move from?! their offices will be empty. i see caltrane's point. somewhere in calgary some office is going to be sitting empty when the bow comes online. whether it is encanas old office doesn't matter.
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  #50  
Old Posted Aug 26, 2011, 10:11 AM
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The space that is going to be lost in the shuffle here is Class F (if there was such a thing) or worse. It is a market reserved to the most junior of O&G startups, non-profits and Primerica suckers. I have been through plenty of this space in the last few weeks as an affiliated company seeks expanded space. Originally we wanted to shack up in EAP together but the timing didn't work.

I suspect some of these buildings will start coming down as the decade wears on. Others, Epcor Place for instance is being gutted to bare concrete and will be reborn AAA.

I suspect the ball will swing first in Eau Claire.
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Last edited by Policy Wonk; Sep 11, 2011 at 7:07 AM.
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  #51  
Old Posted Aug 27, 2011, 12:29 AM
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Quote:
Originally Posted by Innsertnamehere View Post
sure, encanas old space is leased. but where will the companies moving into their old offices move from?! their offices will be empty. i see caltrane's point. somewhere in calgary some office is going to be sitting empty when the bow comes online. whether it is encanas old office doesn't matter.
This logic assumes that there has been no growth (ie real absorb.) in the Calgary market, which is certainly not the case. Total occupied space downtown now exceeds levels seen during the last boom in 2007/8. The oil companies are growing, hiring and leasing space (and in turn companies that service the energy industry, financial companies, insurance companies, law firms etc are also growing). Yes there is a lot of shuffling around of tenants (particularly in that "flight to quality" many talk about, but there is also a lot of new growth happening.

There are 3 major towers ready to go with DP's as we speak (EAP2, City Centre and Oxford's Eau Claire Development). Dont be surprised when one or more are given the green light in the next 6-12 months.
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  #52  
Old Posted Aug 27, 2011, 12:33 AM
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Originally Posted by caltrane74 View Post
I don't get it!

You guys keep saying, there is so much demand in Calgary and there isn't enough space, yet vacancy is close to 10%? (And all vacated space is spoken for)

Where is the logic in this please explain!/?
Vacancy is NOT 10%, Q2 reports were 7.5% and drastically dropping. Now being close to the end of Aug, AA/A class space is sub 3%. If you are that skeptical of the Calgary market, email up a couple downtown agents and see how many options you have if you need 20,000 sf.
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  #53  
Old Posted Sep 16, 2011, 8:51 PM
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Originally Posted by caltrane74 View Post
I don't get it!

You guys keep saying, there is so much demand in Calgary and there isn't enough space, yet vacancy is close to 10%? (And all vacated space is spoken for)

Where is the logic in this please explain!/?
Downtown vacancy now at 6.4%: http://www.calgaryherald.com/busines...747/story.html
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  #54  
Old Posted Sep 16, 2011, 9:36 PM
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Quebec City's overall office vacancy rate for the second quarter was 4,4% and residential vacancy was 1,0%.

http://www.avisonyoung.com/library/p...4_11_Final.pdf
http://www.quebecinternational.ca/ec...terly-analysis

By the way, here's a pretty good overview of the Canadian office market. It might be a petty concern on my part but it always bothers me that Quebec City rarely is included in these lists, considering that Quebec is Canada's biggest city east of Montreal. If its office market was somewhat similar to that of Montreal I could understand but it is actually very different (rant over). Anyway, here is the market overview:

http://www.cbre.ca/NR/rdonlyres/D6AF...nal2q11ofc.pdf
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  #55  
Old Posted Sep 16, 2011, 10:32 PM
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St. John's vacancy rate is 3.84%, by far the lowest rate in Atlantic Canada. Since last year our class A vacancy rate has been at 0%, I bet no other city has a lower rate then that.

https://www.turnerdrake.com/survey/attachments/102.pdf
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  #56  
Old Posted Sep 16, 2011, 11:52 PM
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Originally Posted by PoscStudent View Post
St. John's vacancy rate is 3.84%, by far the lowest rate in Atlantic Canada. Since last year our class A vacancy rate has been at 0%, I bet no other city has a lower rate then that.

https://www.turnerdrake.com/survey/attachments/102.pdf
Well considering you can't have negative vacancy rates...

And it's not healthy for a market to have a rate that low anyway, so it's not something that should be striven for.

http://www.avisonyoung.com/library/p...ter.Spring.pdf

Regina has a Class A vacancy rate for its competitive office market of 0.86% (not healthy), and an overall rate of 1.8% in the competitive office market. If you include the non-competitive market (company owned buildings, Government occupied, long-term leases), the overall rate drops down to 1.01% out of about 6.3 million sq ft of office space.

This is why there is a tower currently under construction, one in the final planning/proposal stages, another one or two rumoured to be in the works, and a shorter building downtown currently in the prepping stages to provide some Class B spaces for smaller companies.

With all of these developments, the market might finally approach a vacancy rate that's healthy... but who knows, with the way the economy is, it's anyone's guess as to how quickly it will be absorbed.
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  #57  
Old Posted Sep 17, 2011, 2:13 AM
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Originally Posted by davidivivid View Post
By the way, here's a pretty good overview of the Canadian office market. It might be a petty concern on my part but it always bothers me that Quebec City rarely is included in these lists, considering that Quebec is Canada's biggest city east of Montreal. If its office market was somewhat similar to that of Montreal I could understand but it is actually very different (rant over). Anyway, here is the market overview:

http://www.cbre.ca/NR/rdonlyres/D6AF...nal2q11ofc.pdf
Where is Quebec City's principal business district - the place where real companies and accounting firms and commercial law firms etc. are concentrated? I know there are tons of government buildings there, but I never hear very much about business activity in the city. Winnipeg and Quebec City are theoretically similar, both being about the same size and provincial capitals, and yet Quebec seems so much more government dominated.
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  #58  
Old Posted Sep 17, 2011, 2:27 AM
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PM’s ‘rock star’ status fuelling office demand


Canada’s stable economy, and Prime Minister Stephen Harper’s “rock star” popularity among foreign investors, is fuelling a surge of demand for office space, especially in the GTA’s suburbs, according to a new study.

http://www.thestar.com/business/arti...-office-demand
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  #59  
Old Posted Sep 17, 2011, 3:41 AM
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Originally Posted by Innsertnamehere View Post
sure, encanas old space is leased. but where will the companies moving into their old offices move from?! their offices will be empty. i see caltrane's point. somewhere in calgary some office is going to be sitting empty when the bow comes online. whether it is encanas old office doesn't matter.
are you suggesting that there will be no new jobs created in all of this. just people being moved from one place to another. that is a very narrow view of the Calgary market. there will in fact be a large number of new jobs created because of the advancing economy. this is why new office space is created, not because they want to move into an shiny new tower. the demand for extra space is actually needed.
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  #60  
Old Posted Sep 17, 2011, 4:35 AM
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Where is Quebec City's principal business district - the place where real companies and accounting firms and commercial law firms etc. are concentrated? I know there are tons of government buildings there, but I never hear very much about business activity in the city. Winnipeg and Quebec City are theoretically similar, both being about the same size and provincial capitals, and yet Quebec seems so much more government dominated.
Well, there isn't that much more to Manitoba than Winnipeg for the government to govern. Quebec is seven times larger; it is to be expected that its government would be larger accordingly.
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