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Cutbacks by the provincial government have driven Victoria’s office vacancies to record levels and are adding to the glut of space in downtown Vancouver, commercial real estate agents and property managers confirm.
“The amount of vacant office space in Victoria is at an all-time high,” said Bob Law, an office specialist and broker with Colliers International in the capital city. “The increase can be directly traced to government downsizing.”
The provincial government accounts for 3.6 million square feet, or about 53% of Victoria’s office inventory, much of it in Class B buildings, but it has been reducing its footprint in recent years. An economic slowdown hasn’t helped in leasing up space the government is leaving behind.
An example, Law said, is a 26,000-square-foot space on Johnson Street that the province vacated when its lease expired last year. That space remains dark, helping to push the total vacant space in Greater Victoria to 793,000 square feet and the vacancy rate to a 16-year high.
As of the end of 2013, overall office leasing in Greater Victoria was negative by more than 23,000 square feet and the vacancy rate has risen to 9.2%, Colliers reports.
“[The province] is consolidating space. There is a lot of desk sharing,” Law said, adding, “From a taxpayer’s perspective, this is wonderful news.”
A provincial government communications officer said there was no official policy on reducing office space requirements, but the message is loud and clear in the real estate industry.
Vancouver property manager Warren Smithies, vice-president of Martello Property Services Inc., citing a contact in “upper levels” of the provincial government, said the province and its crown corporations have “recently been mandated to reduce their office footprints by as much as 35% to save taxpayer dollars and aid the government in achieving a balanced budget.”
Metro Vancouver’s office vacancy rate has increased to 8.4%, from 7.9% in the third quarter of 2013, which Colliers’ Vancouver office says is “caused by sublease spaces becoming vacant and government agencies consolidating space in downtown Vancouver.” This includes provincial and federal governments.
The Western Investor is part of the Business in Vancouver Media Group.