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Vancouver - In its Real Estate Market Research study published today, Newmark Knight Frank Devencore reported that, as downtown Vancouver's current cycle of new development winds down, the office market is gradually becoming more challenging for tenants. Buildings delivered during this cycle of development are approximately 94% leased, and overall vacancy rates in Vancouver's downtown core are continuing to tighten. The vacancy rate for all office classes in downtown Vancouver was 7.5% at the end of 2016, down from 9.6% a year earlier.
"The market is somewhat fragmented at the moment," said Jon Bishop, Executive Vice President and Managing Principal of Newmark Knight Frank Devencore's Vancouver office. "Much of the downtown office space with less dated, user-friendly improvements has been absorbed. Many of the remaining opportunities are built out with older improvements or are in shell condition that require more substantial tenant improvement projects and capital budgets. For tenants requiring over 25,000 square feet of contiguous space, The Exchange Building, which will come online later this year, may offer the best new-build alternative."
The Newmark Knight Frank Devencore report also notes that strata office spaces are attracting heightened interest. At present, there are almost 1,100 commercial strata lots in downtown Vancouver and two strata office developments scheduled to be completed in the first half of 2019. Up to 45,000 square feet is currently being offered at 1575 West Georgia Street during its pre-sale stage and One Burrard Place recently sold out 60,000 square feet of office space in less than 2 months, indicating substantial interest in strata ownership from investors.
Newmark Knight Frank Devencore recently arranged a pre-sale of 45,000 square feet for a client; this is one of the largest office strata transactions in British Columbia.
"While supply and demand in the downtown Vancouver office market are in relative balance, tenants will likely find the office market more challenging in the quarters ahead as space is steadily absorbed," Mr. Bishop said. "Opportunities still exist, but they are often building-specific. Some landlords, for example, are beginning to market their properties aggressively, while others are more willing and able to carry vacant space and wait until market conditions turn in their favour. With the next new development cycle likely some years away, space users may want to consider extending a term into the next building cycle underway in 2019/2020."
To read the complete market study, please go to: /home/market-information.aspx?d=748
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 London-based partner Knight Frank and independently-owned offices, NGKF's 14,100 professionals operate from more than 400 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. NGKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
NGKF is a part of BGC Partners, Inc., a leading global brokerage company servicing the financial and real estate markets. BGC's common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com/.
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