Speculation is mounting that some of the new office towers being planned in downtown Vancouver could cut lease rates - or even cause them to be shelved - due to a lack of viable anchors.
Only two pre-leases were announced in the second half of last year for four major new downtown towers being built: a total of just 40,000 square feet at the 275,000-square-foot MNP tower by Oxford Properties, where more than half the space remains unclaimed 18 months from completion.
Cadillac Fairview, which is making over the former Sears building into 292,000 square feet of office space, has no leases confirmed.
Manulife Financial received rezoning approval for its planned 360,000-square-foot tower at the corner of Nelson and Howe streets about a year ago but has yet to find an anchor tenant.
Vancouver Whitecaps co-owner Greg Kerfoot's proposed 350,000-square-foot 25-storey tower at 320 Granville Street also lacks an anchor tenant.
But some developers remain confident.
"We are negotiating with potential tenants," SwissReal principal Franz Gehriger stressed to Business in Vancouver. "We are building. We are confident that we will have tenants in six months." SwissReal and partner Crédit Suisse received rezoning approval in November for a 400,000-square-foot tower that is 90 per cent office space.
An Avison Young survey suggests that if new developers cut rates to entice tenants it could have a snowball effect: "If developers of new inventory decide to stimulate leasing momentum by reducing [rent], landlords may need to adjust expectations."
from Western Investor May 2013
