The developers behind one of Vancouver’s newest and largest office tower projects see the shared office space model as a “release valve” for tenants in an increasingly tight and competitive downtown market.
In the case of BentallGreenOak‘s (BGO) B6 tower, that makes co-working brand WeWork a good fit as the first major tenant announcement. WeWork will occupy the first 10 floors – just over 170,000 square feet – of the 32-storey, half-million-square-foot tower.
It’s being constructed at the corner of Thurlow and West Pender Streets.
When asked about who courted whom for the lease with WeWork, Tony Astles, BGO’s managing partner and head of Canadian real estate services, said it was “a little of both.”
BGO and WeWork have what Astles called a friendly and prosperous relationship, which includes WeWork locations at several BGO properties in Canada and the U.S.
“The building itself sets up very nicely for an operation like WeWork,” he said.
B6, with the WeWork deal, is now just over 40 per cent pre-leased. Another deal in the works should soon move it up to over 45 per cent, Astles said.
Shared office space in Vancouver
BGO predicts Vancouver’s tight office market won’t change appreciably over the next three to four years. Vacancy is currently around three per cent in the downtown.
That will make co-working and shared-space facilities a valuable commodity moving forward.
Shared office space can offer tenants an instant location to set up or expand while they wait for a permanent space to become available in a new building, Astles said. “It’s a great release valve for tenants who have urgent needs.”
He said there are about 3.5 to four million square feet of office space being built downtown, but more than 45 per cent is already pre-leased. Within four years, the new supply will have relieved some of that pressure, but not much.
“I don’t see the vacancy rate spiking so that we have a glut of space,” he said. “I think we’re barely meeting the demand of the current growth we’re seeing in the market.”
Major merger creates BGO banner
BGO has major holdings in Canada, the U.S., Europe and Asia and has invested $400 million into B6. The building is a joint venture with Ontario’s OPTrust. Astles said BGO is the development entity for the partnership.
The new tower will add 534,000 square feet of leasable office space to the market when it opens in February 2023. The building will also serve as BGO’s own Vancouver headquarters.
Under its new banner, BGO has more than 750 institutional clients with approximately US$46 billion of assets under management across office, retail, industrial and multi-residential property.
BGO is an affiliate of SLC Management, a global institutional alternatives asset management arm of Sun Life. SLC Management offers a broad platform of investments across public and private fixed income, real estate equity and debt.
Astles said its main Canadian offices are in Toronto and Vancouver.
BGO’s two dozen active projects
“If you go right across the country, we have as many as 27 projects that stem from ready-to-start entitlements to (nearly) finished construction,” Astles said. “It’s a considerable pipeline across Canada.”
In B.C., the developer is also working on a 13-storey, 118-unit multi-family rental project at Burrard Street and 14th Ave.
“We (also) have two industrial buildings that we’re just about to start on construction in Surrey, (and) another 180,000-square-foot office building for a third-party client that’s under design development,” Astles said. “They’ll start construction probably next year.”