Property Biz Canada

Empty office tower ‘skews’ New West vacancy rate


The Metro Vancouver city of New Westminster is centrally located, with relatively affordable home prices, a compact downtown core, and well-connected to the region by two SkyTrain stations.

The Anvil TowerIt all adds up, presumably, to a strong office climate. But instead, the city of about 66,000 lags behind its municipal neighbours when it comes to the demand for office space.

The empty Anvil Centre Office Tower goes a long way in driving up the overall vacancy rate, said Josh Sookero, a principal with Avison Young in Vancouver.

“You’ve got all of the Anvil Centre office space sitting vacant, right on Columbia Street,” he said of the class-A office tower at Columbia and Eighth. He said it has been marketed both for sale on a strata basis, and alternatively, for lease, but it remains empty — all 137,000 square feet of it.

Office vacancy in New West reached its highest level in more than a decade at the end of 2016 at 17.4 per cent. Altogether, the Metro Vancouver office vacancy rate is 9.7 per cent, according to Avison Young’s year-end regional office report.

To compare numbers, the report concluded downtown Vancouver’s office vacancy rate is 7.2%; Yaletown’s is 6.8%. Those markets are followed by the North Shore (7.9%), Richmond (10.7%); Burnaby (12.5%) and Surrey (15%).

Completed without pre-lease agreements

Completed in 2014 without pre-lease agreements, the Anvil Centre Office Tower is a nine-storey building originally developed by the city and sitting atop the city-owned Anvil Conference Centre building.

The city eventually sold the office tower to 777 Columbia for $36.5 million, according to The New Westminster News Leader. 777 Columbia is jointly owned by Kingswood Capital and CRS Group of Companies. Co-owner Suki Sekhon told the News Leader in 2014 he expected the building to be leased up by 2015. (City of New Westminster sells spec office tower, Property Biz Canada, March 19, 2017)

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CRS Group could not immediately be reached for comment, and no one from Kingswood Capital was available for an interview on Wednesday.

Cushman & Wakefield is the listing agency for the building and the listing agent did not reply to an email and voicemail seeking comment by deadline. However, Sookero and two others, including a city spokesman, confirmed it remains empty.

The Anvil Centre Office Tower is indeed the reason the vacancy rate is so high in New West, said Luke Gibson, a commercial broker with CBRE.

An unbalanced market, yet on par with others

However, Gibson disputed the notion New West’s office market is failing. He said CBRE’s own vacancy rate accounting has New Westminster at 14.8%.

“That’s actually lower than Burnaby,” he said. “It’s on par with Richmond, so it’s not astronomically high, but it is still arguably an unbalanced market.

“If you pull out the Anvil (office tower) from the New Westminster vacancy, then it drops from 14.8 per cent down to six per cent.”

He couldn’t say why the building remains empty, noting it sits in the downtown core across from one of the city’s two downtown SkyTrain stations.

“I can’t put my finger on it with Anvil,” he said.

“The B- and C-class buildings in New West, they’ve actually been very healthy. Over the last five years they’ve been in single-digit vacancy rates. There hasn’t been a big swing one way or the other.”

Blair Fryer, a spokesman for the city, agreed that without the Anvil Centre, New West would be on par with the regional average for office vacancy.

Other class-A office space well-leased

He said other class-A office space in Westminster Centre South, Uptown Centre and at the Brewery District has been well-leased.

“New Westminster has been doing a lot of work downtown over the past few years bringing additional amenities to that area,” Fryer said, highlighting Front Street in particular.

“Part of that work has been moving half a waterfront parkade that was built in the 1950s and exposing that heritage area to sunlight once again.

“You’re seeing new restaurants and other types of offerings that really taken together make that a desirable place for businesses to locate and people from around the region to come,” he said.

Fryer said its other class-A office projects likely wouldn’t be built until the Anvil office tower fills up.

“Anvil Centre needs to be fully leased before we see any major class-A office development presented to City Hall, and we anticipate that happening in the not too distant future,” he said.

Avison Young’s Sookero agreed.

“You would want a pre-lease commitment before building something large and new,” he said.

 

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