Council approved an architecturally distinct, 24-storey office tower planned for the corner of Georgia and Homer streets at a public hearing Feb. 20. The decision came after speakers from the Downtown Vancouver Business Improvement Association and the CBRE, a commercial real estate firm, outlined the need for more new office space in the city.
The rezoning application, submitted by Merrick Architecture on behalf of Westbank Project Corps., was for 400 West Georgia St. across the street from library square. Aside from office space, the project includes commercial space on the ground floor. A restaurant is proposed for the Homer Street side of the building and improvements are also planned for the public space at the base of the building.
The tower itself features stacked four-storey boxes articulated with green walls.
The new building will be two-and-a-half times the density permitted under the previous zoning, but it will create an additional 228,000 square feet of employment-generating space, Michael Naylor, a senior rezoning planner for the downtown district, told council before the vote.
People attending a public open house about the project last fall were generally supportive, noting both the need for office space and the distinctive design of the tower. There was some concern about the durability of the plants on the exterior green walls.
“In response, the applicant is proposing a perforated screen treatment for these walls so that in the season where there are no leaves on the vines, visual interest will be maintained,” Naylor said. “Hearty plants such as Virginia creeper will also be specified. This is the type of vine that grows on the Sylvia hotel.”
While a small portion of the tower projects into the view cone, the impact was considered modest.
Competing with the suburbs
Charles Gauthier, president of the Downtown Vancouver Business Improvement Association, said the organization supported the rezoning application.
Gauthier said diverse office space is a critical element in the long-term success of the city and its economy.
“Increasingly, Vancouver competes not only with suburban office markets but with other cities that may be more attractive to business for a variety of reasons,” he said. “Talent tends to want to be in a vibrant urban area that caters to their lifestyle. Businesses are responding to this need in many North American cities where large technology companies, who would traditionally seek out suburban locations, are increasingly moving into the urban core. This is the environment to which Vancouver has to respond. Our downtown office space has to be able to compete with other cities on this level.”
Gauthier said the BIA’s “Reimagine Downtown Vancouver” initiative a few years ago also found that people want “exciting and unique” architecture in the downtown.
“The cantilevered pods and exterior green walls are striking features of the futuristic design for 400 West Georgia,” he said, adding that aside from providing much-needed office space, the building is also in a prime location with close proximity to transit, shopping and services for the employees who will work in it.
Norm Taylor, executive managing director of CBRE’s Vancouver brokerage operation, also spoke in favour of the development, citing statistics about the vacancy rate in the downtown core, which is made up of 24 million square feet of total product.
At the end of 2017, Taylor said the vacancy rate sat at five per cent. That figure represents 1.2 million square feet of total area available.
“We have one of the tightest markets in North America,” he said, calling it the lowest vacancy rate of any major urban city in Canada and second in North America.
“Our three-year rolling absorption, which is the measure of vacancy and leasing activity, is positive. That’s at 700,000 square feet per year, meaning that we have less than two years supply of vacancy,” he said.
Taylor noted that pension funds and major landlords that look at product will underwrite any office building with a structural vacancy of five per cent, which means if a building has a five per cent vacancy, they write it off as completely leased.
“They need that for growth of their existing tenants and they need that for project space in case somebody has to do a renovation within the office tower,” Naylor said. “So, for all intents and purposes, right now, our market is full.”
Of the 1.2 million square feet of available space, he said very little is suites greater than 50,000 square feet. Taylor said 165 suites are less than 5,000 square feet, 56 are between 5,000 and 10,000 square feet, 19 are between 10,000 and 20,000 square feet, three are between 20,000 and 50,000 square feet, and three are greater than 50,000 square feet.
“When we talk about business growth and people coming to this market and looking at global relocation into Vancouver as a world-class city, when you only have three alternatives that are greater than 50,000 square feet, it’s very limiting, especially when you consider — not to talk out of school — but two of three alternatives that are greater than 50,000 square feet right now are conditionally under offer and likely going to be leased within the next three to six months,” he said.
There are also multiple offers for some the 20,000 to 50,000-square-foot properties.
Taylor said much of the demand is from technology businesses, which prefer to be in the downtown core rather than the suburbs. If they can’t find space in Vancouver, they may opt for other cities such as Calgary or Toronto.
Since 2015, two million square feet of new supply has been added in Vancouver but only two of buildings are under 100 per cent occupancy and he expects that space will be gone in the next six months.
“It’s quite easy to see we need this office building. There’s nothing we hate more than having tenants from our international platform come into this market saying, we’d like to be here, show us what’s available, and we say, I’m sorry we can’t house you. Off to Calgary or Toronto,” he said.
Council voted unanimously in favour of the rezoning.
“It’s going to be a great addition to the architecture and the quality office space downtown that we need downtown so desperately right now,” Mayor Gregor Robertson said. “…I think it was only a couple of years ago that industry folks were saying we were over building at that point. Clearly, our economic growth keeps out-pacing the space coming online and that is a concern.”