This week’s top stories focus primarily on Vancouver’s tech industry impact on office space and employment and the province’s retail demand. Vancouver continues to draw tech talent, with news of tech leaders Facebook and Amazon flocking to downtown space. However, a new report shows that the city’s tech may be waning in rank. On the retail side, a new development on Vancouver Island is placing faith in Sidney’s consumer demand, while Robson Street rents drop.
Here is Western Investor’s pick of the most buzzworthy commercial real estate published this week.
A new report shows that despite demand, Vancouver has dropped a one spot in national tech hub position. But it’s not necessarily bad news for tech companies and employees.
CBRE examined the country’s 10 biggest cities and ranked them as tech hubs based on 14 factors focused on tech talent employment, education, high-tech clustering and cost competitiveness.
Despite the city’s high cost of living, the report noted Vancouver is still a competitive city for companies looking for highly skilled talent and relatively low labour costs.
With 37.3% of Vancouverites between the ages of 25 and 64 holding a bachelor’s degree or higher, the average salary for a tech worker was $79,402.
The report found Vancouver had the highest average gross office rents at $39.84 per square foot.
Toronto was second at $34.24 per square foot.
Meanwhile, the rent-to-wage ratio clocked in at 18.5% compared with Toronto’s 18% and Ottawa’s 15.1%.
But Vancouver may make gains in next year’s rankings.
This week Facebook (Nasdaq: FB) announced it would add 16,000 square feet to its footprint to downtown Vancouver when it moves to new offices at Cadillac Fairview’s Waterfront Centre.
Facebook will be making its return to Vancouver next year, opening across two floors in a prime downtown Vancouver location, showing that tech companies are continually drawn to the city.
Facebook, which closed a temporary recruiting office in downtown Vancouver a year ago, is roaring back into the city.
The social media giant has leased more than 36,000 square feet at 200 Burrard Street in Cadillac Fairview’s Waterfront Centre.
Facebook’s space will accommodate the growing needs of its business, a spokesperson for the company told Western Investor.
A cloak of confidentially agreements covers the Facebook agreement, but Western Investor has learned it will take the fourth and fifth floors in the 21-storey Waterfront Centre tower. Facebook’s new office is expected to open late in 2018.
This news follows Amazon's plans to open a second office of 150,000 square feet in the new Oxford tower at the southwest corner of Dunsmuir and Homer Streets. Amazon is expected to add 1,000 new tech jobs to the city.
Tech companies now dominate downtown Vancouver office demand, accounting for more than half of the office leases in the past year.
Robin Buntain, an office-leasing specialist with Avison Young in Vancouver, said the leasing action by big tech players is due to more than location and local talent.
The low value of the Canadian loony compared to the U.S. dollar, he noted, makes Vancouver offices less expensive than San Francisco. But Buntain cautioned that if tech demand continues to accelerate, leasing rates for top-class Vancouver office space would inevitably increase.
The Vancouver street ranks as the ninth priciest in the Americas, though rents have dropped modestly over the past year, still lagging far behind New York’s Fifth Avenue or Beverly Hill’s Rodeo Drive.
Rents on Vancouver’s Robson Street have dropped more than 15% in the past year to US$141 per square foot per year, according to the Cushman Wakefield study Main Streets Across The World 2017, which ranks rents for streetfront-retail districts globally.
That rental rate is the ninth priciest in the Americas. In 2016, Robson Street rents were US$166 per square foot per year, the study noted.
Some of the drop in rents could be attributable to currency-exchange rates, given that the Canadian dollar has risen more than 6% compared with the same time last year. It was unclear exactly what exchange rate Cushman Wakefield used.
“Rents have generally shown modest falls [across the Americas],” according to the study.
“Canadian retailers are exploring change … seeking out new formats in ‘cool-street’ areas to buffer or replace traditional high-street locations.”
The study did not include Vancouver's Alberni Street but that street would be an example of a "cool street" that has lured retailers that historically may have chosen to lease space on Robson Street.
Manhattan’s Upper Fifth Avenue between 49th and 60th streets ranked as the priciest street for retail rents in the world with the average rent being US$3,000 per square foot per year – more than 18 times more expensive than Robson Street. That stretch of Fifth Avenue had the same rent a year ago.
A pricey Vancouver Island retail development has been given the greenlight, will a gorundbreaking to follow. Investment in the city shows confidence in the region’s consumer demand.
The developer behind the proposed $35 million, 100,000-square-foot Sidney Crossing retail project near Victoria International Airport should have a permit in the next few months with ground-breaking expected next spring.
The Victoria Airport Authority (VAA), which ultimately will approve the commercial project, essentially gave developer Omicron the green light last month when it handed the proposal over to Sidney for review and comment, according to James Bogusz, vice-president of operations for the airport authority.
“There are still additional steps required once Sidney has provided its comments, but the VAA would anticipate issuing a development permit in the next few months,” Bogusz said.
If fully approved, work could start at the 10-acre site in March or April of next year, according to Omicron vice-president Peter Laughlin.
He anticipates it would be complete with the first tenants moving in by the fall of 2019.
“The VAA takes their role very seriously and they have an agreement with the Town of Sidney for review and comment,” Laughlin said. “We hope the Town of Sidney will be as happy as the VAA are.”
The centre will include 10 buildings, with plans for anchor grocery and major appliance and electronics stores. Omicron has proposed a mix of retailers on site.