Blueprint | BCBusiness
Blueprint's new HQ. It's hip—and it's not downtown
Vancouver's core could face a vacancy crisis
Demand for unique, character workspaces—fuelled by Vancouver's booming creative industries—continues to shake up the market in Metro Vancouver and challenge landlords holding older, traditional office space, according to a new report from Colliers International.
Headlining Colliers's Q2 report are two notable deals by Microsoft and Sony Pictures Imageworks for more than 200,000 square feet of state-of-the-art office space to open in late 2015 in a redeveloped Pacific Centre. While these glamourous deals captured the most attention, the report notes technology firms have been the primary drivers of demand for office space in Metro Vancouver over the past few quarters.
"The Amazons, Microsofts and Sonys haven't had a significant footprint in Vancouver until recently," says Maury Dubuque, managing director for Colliers Vancouver. "Now that they do, we are seeing trends emerge. These media and technology companies want large, open spaces, state-of-the-art heating and cooling systems and lots of natural light. These tenants tend to prefer office space in heritage buildings found in locations like Gastown or Railtown that offer a distinctive 'retro' feel or new modern buildings close to amenities and rapid transit."
As a result, traditional office spaces in the downtown core are faced with modest demand and rising vacancy.
The Q2 report found that vacancy rates are the highest they've been in Metro Vancouver since 2005, rising to 9.3 per cent up from 8.7 per cent in the first quarter of 2014. Colliers attributes current vacancies to a general lack of demand for office space across traditional industries, combined with increased inventory in the suburbs. With almost 3.6 million square feet of office space under construction in the region, there are big questions about what will happen to the over one million square feet left behind.
"This is the oddest market I've experienced in years," Dubuque says. "We are in a construction cycle and all of a sudden there is a tremendous demand for office space in new buildings and a modest to weakfish demand in older buildings."
Among the local companies on the move to non-traditional office space is Blueprint, one of B.C.'s largest full-service entertainment and hospitality management companies. The firm has 400 employees in a dozen nightclubs, pubs and restaurants. When Blueprint's head office staff outgrew their digs in the Electra building at Burrard and Nelson, co-founder Alvaro Prol says they went looking for something more in keeping with the character of the company. After an extensive search, they decided to buy into and renovate part of a heritage building in Gastown at Water and Cordova. It will become the new Blueprint headquarters later this week.
"We wanted to be somewhere where our young creative staff felt at home," Prol explains. "We've renovated 3,600 square feet from the ground up. It's got skylights and huge windows, a ton of natural light." He says the move reflects his company's belief that the entertainment centre of the city is moving east, away from Granville Street to the cobblestone of Gastown.
Of course, in all this there will be winners and losers. Maury Dubuque predicts real challenges in this market for landlords who have not re-invested in their assets and enjoyed low vacancy rates. "They are going to have a rude awakening in this market." For tenants, on the other hand, it could be a good opportunity to "cut very attractive deals."