Commercial realtor forecasts further drop to 2.1 per cent in 2008
Derrick Penner
Sun
Already at historic lows, Vancouver‘s downtown office vacancy should shrink further to 2.1 per cent in 2008, the lowest central-core vacancy rate in the country, according to commercial realtor Cushman Cushman & Wakefield LePage’s 2008 forecast.
Rents are also expected to rise 10 to 15 per cent for so-called commodity space in Class A buildings, which, combined with low vacancy should continue to fuel the trend of businesses relocating outside of downtown.
“The suburbs is really the outlet for a lot of these tenants,” Jeffrey Rank, Cushman & Wakefield’s managing director in Vancouver said in an interview.
“I think with employee bases moving eastward and occupancy costs doing what they’re doing downtown, tenants will see it becoming more and more of an option to be considered in ’08.”
Catalyst Paper Corp.’s move from offices on Howe Street to Richmond, and Bell Canada‘s move of some functions out of the core were a couple of the prominent examples.
Rank added that those kinds of moves will ensure that downtown tenants will continue to find downtown space.
“Those [moves] are happening inside [quarterly reporting periods] so you don’t necessarily see the ebbs and flows in the statistics,” Rank said. “That’s going to continue for 2008.”
The large space that law firm Fasken Martineau vacated in the MacMillan building at 1075 West Georgia Street still needs to be absorbed, he added.
The pressure on downtown vacancy shouldn’t push up the top end of rents. Rank said the top-rated AAA Class view space, at about $45 per square foot, is already at historic highs. “You’re starting to see push back from users who can’t justify those kinds of rents in this market.”
Rents are, however, expected to rise for the lower floors of the same buildings to close up the differential between rents at the bottom and the top of towers.
The Cushman & Wakefield forecast calls for vacancy in Vancouver‘s suburban markets to remain stable at 10.5 per cent over 2008. However, with downtown’s vacancy shrinking, the combined Metro Vancouver vacancy is expected to drop to 5.1 per cent by the end of 2008.
Nationally, the Cushman & Wakefield forecast calls for combined office vacancies in all Canada‘s major cities to fall to 5.6 per cent from the current rate of 6.2 per cent.
© The Vancouver Sun 2007
