This is a big deal:
“Transit is becoming increasingly important in Metro Vancouver,” said Jones Lang LaSalle Executive Vice President Ray Ahrens. “Our Rapid Transit Office Index shows clear evidence that office developments located within walking distance of rapid transit have a significant advantage with less vacancy and higher rents.
The direct vacancy rate for buildings within 0.5 km of a rapid transit station is 4.8 percent compared to 12.3 percent for the rest of the suburban market, and the average asking rents are approximately 8 percent higher.”
For years, the Livable Region Plan and its successors have been criticized because, while residential development has clustered around rapid-transit in regional town centres like Metrotown, little office space accompanied it.
That’s changed. And the evidence has come from the private sector. Here’s the Jones Lang LaSalle report quoted above, aong with the Vancouver Sun coverage here. The difference in vacancy rates is huge:
… the importance of having office space close to SkyTrain appears to be most pronounced in Surrey, where the vacancy rate for office space without rapid transit is 25 per cent, “yet buildings near the SkyTrain are a hot commodity, with a direct vacancy rate of just 0.4 per cent.”
While it’s true these stats are impressive, it hasn’t resulted in any big transit office building boom as far as I’m aware. With such a low vacancy rate around central surrey, why aren’t there new high-density office towers being built? what about in other areas? At the same time, we’ve seen, at least prior to the 2008 crash, a lot of expansion of that sprawling, cheap, car-oriented office park type development. There are some more recent examples to point to, but in the case of Sapperton, that will be filled by Translink itself.
Maybe we just have to wait before we see the results of this, maybe this is a new trend, I don’t know. But so far office development around skytrains seems to have lost out to the lucrative residential, which I’m guessing has historically just been more profitable.
I agree with Tessa. Just about all the building seen around SkyTrain has been high rise condos – in the places where it has happened. And it is still the case that transit oriented development in Greater Vancouver is the exception, not the rule.
The lack of new office space is also true for the Canada Line – where so far the only directly related development has been in Richmond and none of that has an office component. Office parks flourish around the region, were never part of the LRSP and will be with us for some time to come, I think.
Hi Tessa & Stephen,
This is the first study of its kind in Metro Vancouver. Therefore, only now do developers and municipalities have this key quantitative data on the relative benefit of rapid transit for office location. The findings are very clear region-wide and will likely influence construction decisions moving forward, don’t you think?
The study focused on the location decisions of the end user, as reflected in vacancy rates. However, with a better understanding of these decisions, it is likely the office development community will be more interested in building additional space in rapid transit oriented locations which were shunned previously as they are more costly to develop in general compared to the typical office park.
A developer who might have known that the Central City tower is full might have previously thought of that as an indication that Surrey needed more office space, and built something in an office park, without realizing that rapid transit location was a key factor. However, now they will have a more complete picture of the desires of the end users, and know that by building in a rapid transit friendly location they will be avoiding the 25% vacancy rate of transit unfriendly locations. Quote from the report below:
“Since the rest of the Surrey market clearly hasn’t benefited from the competition for –and subsequent lack of –space along the SkyTrain, the disparity between vacancy rates of the two groups of buildings suggests that tenants are more interested in SkyTrain access than the suburb itself. Tenants can be expected to show interest in alternative submarkets along the SkyTrain, such as Burnaby and New Westminster, before they begin to occupy Surrey office space that lacks access to rapid transit.”
There is a lot of new office development around SkyTrain stations including:
– Marine Gateway – An 14 story office tower was just approved
– Aberdeen Square – Three floors of office being built as we speak
– Five or so new office towers downtown near SkyTrain stations
– Broadway Tech Centre has been expanding constantly for the last few years
– Renfrew Centre a new 7 story office building is scheduled to be completed in 2014
– A new office tower was completed recently at Brentwood station
– A new office tower was completed recently at Production Way station
– There is a relatively new office park near Production Way station
– The Brewery District in Sapperton where TransLink is moving its offices.
– Metrotower 3 although I believe that is on hold for now
– There is office space in the 11 floor New West Civic Centre being built next to New West Station. Not sure if it is just for civic offices though
– The new MEC head office by VCC-Clark
– The new RCMP headquarters near King George
– The new Surrey City Hall by Surrey Central
– A couple of towers are planned by Gateway Station but waiting for tenants to come on board
– There is a new office building going in on Terminal east of Main
– A five story office building is included as part of the Oasis development at Coqultlam Town Centre
– A new office building was just built in office park near Gilmore Station
@Richard: that is a large-seeming list and some of those are good examples, but some are really not. The RCMP headquarters may be “near” King George, but it is an extremely transit-unfriendly building, and shouldn’t be described in any way as transit oriented development. I also don’t know if Surrey City Hall is indicative of a private-sector trend. When you take those two out, there’s nothing you mention in Surrey, which had the highest disparity. The MEC office is hardly TOD either, if it’s the building I’m thinking of, nor high density.
Yes, though, the Renfrew tech centre is a great example, though could be better integrated – that had slipped my mind.
I do wonder what portion of the overall office development in the past 10 years has gone to near skytrain though. I expect it would be surprisingly low, when you compare it to the numerous examples of office parks, i.e. in Burnaby near the Fraser River, in Surrey and South Surrey/White Rock area, in the central Burnaby/BCIT area, in the Maplewood area of North Vancouver, and sprinkled everywhere else. In fact, I doubt the disparity in rents and vacancies would be quite so high in places like Surrey if there hadn’t also been such a huge amount of office space built in suburban-style office parks. The fact that municipalities are allowing that sort of job sprawl is a crime and goes against the veryfoundation of the LRSP.
I’m always happy to see those good examples, and yes there are some. But I feel it’s something that, at least until the crash of 2008 put some brakes on the condo boom around town, simply was ignored. Yes, there are some office developments just starting around now around skytrain, but prior to that it seemed to be all condos, all the time. There was just too much easy money.
@Tessa
Not so easy money anymore. The high vacancy rates in suburban office parks will put a damper on any new construction in the near future. Gloucester Industrial Estates is having to lobby for transit service as companies there are having trouble attracting employees. That said, while this office space is hard to serve by transit, more office space and jobs in the burbs will mean even when people have to drive, they are driving much shorter distances. In PoCo, for example, a huge percentage of people living there are now working in the Tri-cities. This was not the case a few years ago. The tolls on the bridges will further discourage people from commuting longer distances out of there communities.
Gloucester Industrial Estates has around 3,000 working there. The new office tower at Thurlow and Alberni alone will have around 2,500 working there. At 130,000 sf, using 200 sf per worker, Merchant Square alone should house around 600 workers accounting for common and meeting space. So between just these two developments, that is more than one huge sprawling office park that is having trouble attracting people.
Merchant Square, the new office building by Columbia Station is marketing to companies so it is not government offices. They are also advertising the fact that they on the Central Valley Greenway.
There is also a new four story (or 5) on Broadway right by Commercial.
An interesting battle in Bellevue, WA where prominent devlopers are squaring off – favouring downtown Bellevue development or outlying transit-oriented development along the future Eastside LRT line:
http://seattletimes.nwsource.com/html/localnews/2016600157_bellevue25m.html