VANCOUVER - In its Real Estate Market Study published today, Newmark Knight Frank Devencore reported that significant development activity is rapidly changing the face of Vancouver's downtown office market. While vacancy rates have risen above the 3% mark in the downtown area's Class "A" and Class "B" office buildings, they remain among the lowest in the country and demand for top-tier space appears to be strong.
"The main story is the impending delivery of approximately 1.8 million square feet of new space to Vancouver's downtown area over the next two years," said Jon Bishop, Vice-President & Managing Principal of Devencore Company Ltd. "This should change the complexion of the downtown market considerably, where the availability of top quality space has been tight for over a decade, driving a historically landlord-favoured market. In fact, some landlords are expecting less demand for older product over the coming few years, and have begun to adjust their expectations. To be sure, there will be more backfill space than has been available for quite some time. As a result of this shifting dynamic, there is a need for tenants to re-examine their opportunities and leasing strategies."
Class "A" and Class "B" vacancy rates in the city's downtown core have tracked well under 5% for the past decade, the NKF Devencore study notes, but with the substantial new inventory coming online these rates may climb as high as 8%-10%.
"A tenant's specific space requirements will have a significant effect on their real estate strategy," Mr. Bishop said. "If a tenant needs space over the next 6-18 months tighter conditions prevail, though there is a softening trend. If, on the other hand, you have a few years before your lease expires, the new supply should open up the market considerably. But there are a number of variables. In short, while the market will be loosening and offering more advantages to tenants than have been available for at least two decades, negotiating the market can be complex and will ultimately reward meticulous research and comprehensive planning."
In the rest of the Canada, combined Class "A" and Class "B" vacancy rates spaces have climbed only slightly through 2013, from 4.5% to 4.9%, reflecting a relatively flat economy. At the same time, it should be noted that the country's total inventory of built office space has increased considerably over the past two years, from approximately 207.7 million square feet in mid-2011 to 210.9 million square feet today.
About Newmark Knight Frank Devencore
As part of Newmark Grubb Knight Frank, one of the world's leading commercial real estate advisory firms, Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage, exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank (NGKF) is one of the world's leading commercial real estate advisory firms. Together with its affiliates and London-based partner Knight Frank, NGKF employs more than 12,000 professionals, operating from more than 320 offices in established and emerging property markets on five continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. Its integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, NGKF serves the local and global property requirements of tenants, landlords, investors and developers worldwide. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.bgcpartners.com.
For further information, contact:
Director, Marketing and Communications
514-392-1330, ext. 225
Newmark Knight Frank Devencore
Devencore Ltd., Real Estate Agency
Jon T. Bishop
Vice-President & Managing Principal
Devencore Company Ltd.
604-681-3334, ext. 2225
Newmark Knight Frank Devencore