Downtown Vancouver’s long-moribund office market has found itself suddenly tight. For years, condos sprouted among the office towers. A few buildings were even converted to pricier residential use. Now office space is back in demand, and a different kind of conversion is imminent. The top four floors of the city’s most infamous department store and architectural eyesore—the giant bathtub-tiled box at Granville and Georgia that was first Eaton’s, then Sears—are going to be transformed into a dazzling new workspace.
Owner Cadillac Fairview has taken that route with its Pacific Centre property even though Vancouver’s downtown is bingeing on office development already. There is a million square feet in three towers underway, and a million more in the planning stages for half a dozen more. This comes after almost a decade of inactivity.
The Cadillac Fairview offices, sitting over the department-store-client-that-can’t-be named (but everyone knows is Nordstrom), will now provide the kind of giant floor plate that used to be available only in the suburbs. It’s a size that the company is hoping will attract engineering companies, game developers or federal-government clients.
Office-space brokers think the huge spaces to be created in the glassy, James Cheng–designed building—70,000 square feet per floor—stand a good chance of finding leases quickly, in spite of the competition. Why? Because it sits dead centre on top of the two amenities that tenants value the most these days: transit and downtown life. “For the young people that companies want to attract and retain, it takes amenities. And these days, the downtown core—the clubs, the shopping, the restaurants—is their amenity,” says Maury Dubuque of Colliers International.
The push downtown showed up especially in the past three years, as several high-profile companies abandoned their suburban premises and moved into the city. That has resulted in a spectacularly low vacancy rate—3.3% as of the year’s mid-point. In contrast, suburban vacancy rates increased to around 10%, and up to 22% in Richmond.
As a result, downtown office developers, who had sat on the sidelines since the last complete office tower opened (for PricewaterhouseCoopers in 2003), went into action. They are doing it in a way characteristic of Vancouver, known as a no-head-office, small-operations town where major downtown buildings rarely have a client that takes more than a couple of floors. Towers are being planned—almost a dozen at last count—and built largely on spec, with a major tenant sometimes nailed down by the time the first bulldozer shows up, but sometimes not. The rest of the building will be up for grabs during the construction period.
Can Vancouver, whose entire downtown could fit onto Toronto’s little finger, really support all the new space? Maybe not at this particular high tide of the office-building cycle. Especially as the gaming, biotech and junior mining sectors are hurting right now. Some projects may have to wait for the economy’s next full moon.