Juniors spook office market
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A downturn in the resource sector has shaken Vancouver junior mining companies and spooked office landlords in the downtown core. The threat of even more office space going dark – on top of the 250,000 square feet of negative takeup in the last three quarters – is timely as four new office towers break ground.
A survey by commercial real estate company DTZ Vancouver found that junior resource companies (JRCs) occupy 375,000 square feet of downtown office space and, in total, resource companies account for 28 per cent of the total Class A and B space in the core.
Already junior resource firms have pushed 260,000 square feet of sublease space onto the market, reflecting a widespread downturn in resource stocks and difficulty in securing financing.
“If all JRCs were to vacate their office premises, the [downtown] vacancy rate would increase to 4.9 per cent, “ DTZ estimated, adding that this is “a highly unlikely scenario.”
The current downtown vacancy rate is 4.5 per cent, but it has been inching up since the end of last year.
DTZ estimates that 60 per cent of the 1.4 million square feet of new office towers being built downtown is pre-leased. The latest out of the blocks is the 270,000-square-foot Manulife Financial tower at 980 Howe Street, where BGC Engineering Inc. has taken 70,000 square feet. The 14-storey tower is expected to complete in 2015.
from Western Investor September 2013