Despite turbulence in the public markets, downtown Vancouver is set to see several companies announce leasing commitments in new developments this summer.
“Most of the transactions that are taking place are happening in new builds across North America, and I don’t think Vancouver will be any different,” said Mark Chambers, executive vice-president, office leasing with JLL in Vancouver. “Tenants are looking at new builds, are looking at how they’re going to use their space differently.”
JLL is handling marketing for 601 West Hastings Street, a 25-storey development by PCI Group which Chambers said is seeing “really good activity.”
But there have been no announcements, and Chambers doesn’t expect any until late June or the following quarter. Similarly, major commitments are rumoured to be pending for 1090 West Pender Street – Bentall Greenoak’s B6 tower – which remains 49 per cent leased.
While pace of the market has picked up, Chambers said it’s still not back at pre-pandemic levels. Recent moves in the stock market have dampened companies’ desire to commit to new space. Match.com announced a commitment to 30,000 square feet at 1133 Melville Street, but Chambers said others have been shy.
“We’re still a tech-driven city,” he said. “I think it’s delayed a lot of the decisions.”
Still, JLL’s most recent statistics point to rising uptake of new space as offices welcome back workers.
With nearly 3.1 million square feet of office space under construction, project owners had preleased 69 per cent of the space to tenants in the first quarter.
Prior to the pandemic, more than 4 million square feet was under construction and 64 per cent had been preleased. The pandemic put the brakes on some deals, with commitments falling to 61 per cent of the incoming inventory at the end of 2020, but the ratio began rising in 2021.
All things being equal, that’s set to increase later this year as deals are announced.
“There’s deals that are in the works right now that will shift those numbers up,” Chambers said.
CBRE Ltd. credits improved economic fundamentals over the last two quarters with supporting new lease commitments. Similar to JLL, it estimates preleasing of new space at 68 per cent.
“Numerous offers are in play for significant blocks of space which could drive this rate up,” it said in its most recent quarterly report.
Many existing buildings are also seeing new commitments.
BMO Financial Group recently renewed its lease in Bentall Centre, committing to an additional 65,000 square feet, Hudson Pacific Properties Inc. reported in its most recent quarterly report. BMO will lease 105,000 square feet in an 11-year agreement that runs until 2035.
