More than 1.7 million square feet of technology and life-science office space is expected to be delivered in Vancouver's False Creek Flats and Mount Pleasant neighbourhoods in the next three to five years.
A catalyst for that development is the construction of the new St. Paul's hospital, which is taking shape just east of downtown Vancouver next to Pacific Central Station. The hospital, among other factors, is helping spur an Innovation District, according to a report recently published by Avison Young.
The neighbourhood has attracted interest from developers focused on providing technology and life science-ready office space due to the proximity to the new hospital, but also because of the eventual arrival of the Broadway Subway line, which will have stations on the doorstep of Mount Pleasant.
Many medical technology companies and educational institutions will want to be close to the hospital and its associated research centre near the campus. Some developers, such as Low Tide Properties, have already been developing in the area, the report, entitled The Innovation District, said.
Construction began on the new St. Paul's Hospital campus in early 2021. The province calls it the largest hospital redevelopment project in British Columbia's history.
PCL Construction is building the hospital, which is relocating to Station Street from its current location on Burrard Street, with a cost estimated at $2.174 billion.
Vancouver office market not as strong as it once was
Plans for various new developments in the area coincide with a period of elevated office vacancy with downtown Vancouver’s vacancy rate touching above 10% for the first time in nearly 20 years.
Despite the increase of empty space, the market remains one of the strongest office markets in North America, and one that is ripe for more demand from tech and design firms — as well as from laboratory and biotech companies that are emerging locally and showing external interest in the market, stakeholders say.
“Whether it's a life science tenant, or a technology-based tenant, or a video game tenant — or even Lululemon in the apparel industry — it just seems like this (area) is . . . being positioned as quite a vibrant neighbourhood within the City of Vancouver," said Tim Holloway, director, innovation & insights, B.C. with Avison Young.
Robin Buntain, a principal and office leasing specialist with Avison Young, said the Mount Pleasant side of the district will also benefit from the Broadway Subway extension, as well as increased density and housing development spurred by the Broadway Plan, a 30-year densification plan focused on integrating new housing, jobs and amenities around the subway line.
The confirmation of the Broadway Plan provides more certainty to the direction of the area, allowing developers and investors to act with greater confidence.
"I think (the district) is a very attractive market from both a user perspective as well as a landlord and developer perspective," Buntain said.
An abundance of new projects underway
The four-storey, 47,347-square-foot strata office is 75 per cent sold and set to open later this year.
The Westbank/Hootsuite development at 110 East 5th Ave. is expected to come online in mid-2024, adding nine storeys and 204,800 square feet. Animal Logic, a digital studio company, has signed up for more than half that space.
AbCellera Biologics, a Vancouver-based biotech company, is adding to its existing Mount Pleasant campus with a nine-storey building at 110 West 4th Ave. now under construction. Completion is expected in early 2025.
Meantime, Low Tide Properties continues to work towards building Lab 29, a 218,000-square-foot building proposed for 1629 Scotia St.
"We are waiting for our final permit from the City of Vancouver, which we anticipate to receive in the summer," Adam Mitchell, vice-president, asset management and development with Low Tide, told RENX in an interview.
"We would be able to break ground on that project shortly thereafter . . . but that will certainly depend on the leasing philosophy we have going at the time and interest in the building."
Mitchell said the building is designed specifically for life science users with wet or dry laboratory requirements. About 30% of the building will be for general office use.
Low Tide already has a substantial life science portfolio and sees unmet demand locally for lab space, Mitchell said. "So (the) space out there is predominantly filled and these companies are now looking at their growth plans and asking us 'What do we have in our development pipeline?' "
The prospects to fill this space in the coming years remain strong despite the elevated local office vacancy, meaning that most of these projects should complete as planned, Buntain said.
"I think we're going to see the macroeconomic position get a little brighter," Buntain said.
"There's been a lot of companies sitting on the sidelines as a result of the impacts of COVID and remote work and . . . of course, with the interest rate hike, we've seen companies kind of pull back on spending."
The situation is also cyclical, said Buntain, who added his firm expects demand for office and tech space to normalize.
"I think we're going to see a number of these projects come to fruition and get built . . . and it's just going to continue to foster (growth) in that area."
False Creek Flats Plan attracting creative occupiers
The 2017 False Creek Flats Plan identified this area as a "creative canvas," Mitchell said, noting the arrival of Emily Carr University of Art and Design’s campus on Great Northern Way in 2017 was a step forward.
Users like that are solidifying the plan, which aims to eventually add up to 30,000 jobs in the district. Mitchell said the opening of the Broadway Subway line in 2026 will also help.
St. Paul's represents another anchor, Mitchell agreed. The new hospital is "going to shift the centre of gravity of the city substantially eastward, or at least more so than any previous project has done."
It will bring jobs, property development and more people in the 20-35 age range moving into new housing projects that also emerge in and around the district, Mitchell said.
It's important to remain flexible in how the area is perceived and described.
"We just don't know where things are going,” Mitchell said, adding the development pipeline will ultimately fall in line with where the economy (and user demand) takes us.