BOMA NewsThe latest news from the Building Owners and Managers Association of British Columbia.https://www.boma.bc.ca/about-boma/news/feed.atom2024-03-12T16:02:23-07:00BOMAhttps://www.boma.bc.ca/about-boma/news/bc-hydro-announces-summer-2024-energy-efficiency-bonus/BC Hydro Announces Summer 2024 Energy Efficiency Bonus2024-03-11T00:00:00-07:00The BC Hydro Programs team has announced a promotional offer for Energy Efficiency Projects completing in Summer 2024.
To encourage energy conservation throughout the summer of 2024 a 50% bonus will be applied to all Custom Project Incentives and SIP (Self-Serve Incentives Program) projects that complete before August 30, 2024.
New applications received March 1, 2024 until July 15, 2024 with a completion date on or before August 30, 2024 will receive a 50% bonus.
All agreements will be processed on a first come, first served basis, funding will be approved up to the limits of our annual budgets and contingent on passing BC Hydro cost tests.
The bonus will be applied to standard incentive amounts for energy efficiency projects. Low Carbon Electrification and CleanBC projects are not eligible. Capacity/Demand response projects will receive the best available offer.
Promotion Details
Promotional offer:
Up to 50% bonus on top of original incentive funding offer,
Removal of 1 year minimum payback rule as well as 75% cost cap
Incentive caps of $1M for Distribution projects remain in place.
Promotion go-live date is March 1, 2024.
Deadline:
50% bonus project completion deadline is August 30, 2024.
50% bonus application deadline is July 15, 2024 11:59:59 PM.
Extensions for custom incentives can be requested through KAM or for SIP by emailing SIP.Operations@BCHydro.com. Projects that extend past the August 30,2024 deadline will not receive a bonus.
Eligibility: All Industrial and Large Commercial customers are eligible. Eligible projects include Energy Efficiency retrofit and New Equipment/New Plant Design projects receiving standard incentive amounts. Low Carbon Electrification and CleanBC are not eligible. Capacity/Demand response projects will receive the best available offer.Can projects that are already in progress get the bonus?Approved projects receiving a standard incentive that have not yet purchased equipment and are able to complete on or before August 30, 2024 can request a new agreement and to receive a 50% bonus. Please contact your KAM or for SIP projects email SIP.Operations@BCHydro.com.https://www.boma.bc.ca/about-boma/news/boma-bc-new-members-february-2024/BOMA BC: New Members | February 20242024-03-07T00:00:00-08:00Join us in welcoming the following members to BOMA BC:
Business Membership:
Harbourgreene HVAC Services Inc.
EMT Safety Planners
34F Design Inc.
Climacool Solutions
Vandelay Ventures Ltd.
Victoria Real Estate Membership:
Itziar Management Ltd.https://www.boma.bc.ca/about-boma/news/boma-bc-sponsors-downtown-eastside-womens-centre-plus-2024-herstory/BOMA BC Sponsors Downtown Eastside Women's Centre + 2024 Herstory2024-03-04T00:00:00-08:00Since 1978, the Downtown Eastside Women’s Centre (DEWC) in Vancouver has been a sanctuary for self-identifying women and children. With a commitment to providing meals, clothing, personal necessities, and essential services, the Centre serves over 700 individuals daily. Thanks to the generosity of BOMA BC members at our industry events last year, we were able to contribute a $10,000 donation to DEWC. We are profoundly grateful for the opportunity to support such a crucial community asset, and we extend our heartfelt appreciation to all who made this donation possible.
On International Women's Day, BOMA BC Chair, Leanne Reynolds, had the privilege of attending DEWC's annual Herstory event. Herstory serves as a fundraiser and a celebration of resilience, strength, and courage, spotlighting the accomplishments and talents of women from diverse backgrounds. This event stands as a powerful testament to the impact organizations like DEWC have on our community and underscores the significance of collaborative efforts in fostering positive change. We are thankful to DEWC for hosting this remarkable event and graciously extending an invitation for BOMA to participate.
View photos from Herstory below.https://www.boma.bc.ca/about-boma/news/boma-bc-new-members-january-2024/BOMA BC: New Members | January 20242024-02-08T00:00:00-08:00Join us in welcoming the following members to BOMA BC:
Business Membership:
Accurate Glass Ltd.
Camfil Canada
Hays Recruitmenthttps://www.boma.bc.ca/about-boma/news/market-report-q4-2023-vancouver-office-figures-members-only/Market Report: Q4 2023 Vancouver Office Figures (Members Only)2024-01-23T00:00:00-08:00BOMA BC Review:
NAI Commercial Q4 2023 Office Insight Metro Vancouver
Colliers Q4 2023 Vancouver Office Market Report
CBRE Q4 2023Canada Office Figures
Cushman and Wakefield Q4 2023 Vancouver Office Report
Highlights:
2023 ends with 20 year high in new office supply: Office construction boom comes to an end.
Flight to quality: Tenants continue to prioritize higher class properties.
Positive Absorption: Is the market showing signs of improvement?
Health Care’s role in the market: Health Care continues to take a large share of the leasing market.
As we closed out 2023, Vancouver’s fourth quarter office market remained generally stable, with asking rents and vacancy rates continuing to stabilize, or shift slightly up or down, depending on the analysis.
While the fourth quarter was quiet, the commercial real estate sector is still in a precarious post pandemic environment, and now uncertain economic times. Vacancy rates remain elevated in certain pockets.
Some market watchers were optimistic and noted hints of improvement. Colliers, NAI Commercial and JLL all noted that the share of sublease space continues to slowly decline since its pandemic peak, and CBRE is predicting a gradual rebound will begin to take shape.
Regardless, Vancouver’s office market remains in a strong position nationally. CBRE lists Vancouver, both Downtown and Metro Vancouver, as the lowest vacancy rates across Canada, while Colliers notes that Downtown Vancouver has slipped into number 2 after Downtown Toronto, at 11.8% and 11.4% respectively.
Post pandemic challenges persist, and there remain uncertainties in the market. While the fourth quarter of 2023 did not offer any strong indicators on the future direction of the office market, Vancouver remains in a strong position compared to other Canadian markets.
Metro Vancouver Office Vacancy Rates
Flight to Class A Properties Accelerates
A trend since coming out of the pandemic has been the flight to quality. As Employers look to lure tenants back to the office, they are prioritizing better amenities and Class A properties.
This plays out in all sorts of metrics. For example, year over year net rent per square foot in Class C properties in the Downtown Core has dropped nearly 10% from $27.38 to $24.51.
Several market watchers noticed how the flight to quality trend accelerated this quarter.
NAI Commercial noted how Class C availability rate reached nearly 20% this quarter, compared to a 15.4% availability rate for Class A.
Explaining this phenomenon, NAI Commercial noted, “These figures support the theory and reality of a shift toward higher-quality properties.” [1]
CBRE’s analysis of net rent also confirmed this trend, noting that Class A asking rent in Metro Vancouver is the highest in Canada at $39.99 Per square foot.
We have noted in previous market updates the outsized impact this has had on Class C properties in certain pockets. Class C buildings in Yaletown, for example, saw vacancy rates rise 500 basis points year over year, sitting now at over 15%.
And according to JLL, while downtown Vancouver is still seeing elevated Vacancy rates, several large deals downtown indicate that there is a return to demand for the downtown core. They believe this is led by demand for high quality properties.
“While downtown vacancy is still much higher at 14.1%, we are beginning to see a return of office demand to the downtown core, spurred by the continued demand for high quality, built-out office space in amenity-rich buildings.” [2]
Supply and Demand Levelling Out
In 2023, supply and demand had a major impact on vacancy rates.
2023 saw significant new office tower construction in Vancouver. According to Colliers, 2.7 million square feet of new supply was delivered to the market in 2023 – a 20 year record for new office construction.
As we closed out 2023, however, we saw the end of a construction boom. Market watchers believe this will start to impact vacancy rates.
CBRE noted that there were no new project launches this quarter, and this will temper vacancy rates in the future. “Look for a continued gradual rebound of the office market as no construction commencements are expected over the next few years.” [3]
Cushman and Wakefield agreed with this analysis.
“The recent wave of new construction is coming to an end in downtown Vancouver which will temper the growth in vacancy towards the end of 2024.” [4]
Metro Vancouver Asking Rents
Absorption Numbers
Most market watchers noted the net positive absorption numbers this quarter, after Q3’s negative absorption numbers. Colliers attributes this partially to the reduction in sublease space.
While this is certainly a positive trend, Cushman and Wakefield noted that this was almost entirely due to a large e-commerce expansion and relocation to the Post’s South Tower.
“Without this significant absorption of 477k sf, the overall downtown Vancouver absorption would have been negative 204k sf indicating softening demand in office space.” [5]
JLL, on the other hand, pointed out how 2023 ended with net negative absorption – a first since 2020, and the second time in 10 years. JLL also noted that many large tenants are delaying leasing and real estate decisions until market conditions improve.
Top Sectors
Health Care continues to play an important role in the Metro Vancouver leasing market as challenges in the technology sector have had a major impact on the leasing market.
Last year, in the fourth quarter of 2022, technology made up 39% of the leasing market in Metro Vancouver. In the fourth quarter of 2023, it only made up only 23%.
Last quarter, we noted how Health Care overtook Technology as the most active leasing sector for the first time in a decade. This quarter, Health Care (21%) slid back slightly into second behind technology (23%) as the largest percentage of leasing demand. However, it still plays a very prominent role.
Fraser Health Authority’s large lease renewal in Surrey, for example, was the largest lease this quarter.
Colliers noted how health care tenants are prioritizing suburban markets, such as Surrey and Burnaby, creating a balance of demand across Metro Vancouver. [6]
Source links:
[1] NAI Commercial Q4 2023 Office Market Report [2] JLL Q4 Vancouver Office Market Report, 2023[3] CBRE Q4 2023 Canada Office Market Report [4] Cushman and Wakefield Q4 2023 Vancouver Office Market Report [5] Colliers Q4 Vancouver Office Market Report, 2023[6] Colliers Q4 Vancouver Office Market Report, 2023https://www.boma.bc.ca/about-boma/news/boma-bc-new-members-december-2023/BOMA BC: New Members | December 20232024-01-08T00:00:00-08:00Join us in welcoming the following members to BOMA BC:
Business Membership:
Airtec Energy Systems Ltd.
Allmar Inc.
Belimo
Robinson Roofing & Sheet Metal Inc.https://www.boma.bc.ca/about-boma/news/development-potential-relief-program-continuation-2024-important-deadlines/Development Potential Relief Program Continuation 2024 - Important Deadlines2024-01-05T00:00:00-08:00In 2023, the City of Vancouver created the Development Potential Relief Program (DPRP) pilot that provides tax relief to select properties paying disproportionately high taxes due to development potential. Council has decided to continue the program into 2024, with new deadlines for submissions. Over the last several years, BOMA BC has actively consulted with the City of Vancouver and the Province on the need for a solution on disproportionately high taxes on development potential, and the overall property tax burden. We believe this program is a step in the right direction that provides relief for a small amount of properties, yet it is still a very narrowly focused program. Changes to the Development Potential Relief Program: There are a series of program refinements listed below. It is important to note the expanded submission process of up to 6 weeks.
Deadline to submit a declaration: If your property is eligible, you must submit a declaration by February 29th, 2024. For more information, please visit: https://vancouver.ca/home-property-development/development-potential-relief-program.aspx For more information:For program criteria, to calculate your tax relief, property eligibility, and ineligible uses, please visit: https://vancouver.ca/home-property-development/development-potential-relief-program.aspxhttps://www.boma.bc.ca/about-boma/news/boma-bc-new-members-october-and-november-2023/BOMA BC: New Members | October and November 20232023-11-15T00:00:00-08:00Join us in welcoming the following members to BOMA BC:
Business Membership:
Matra Construction
Konstant
Inter-Provincial Roof Consultants
Seymour Property Managementhttps://www.boma.bc.ca/about-boma/news/market-report-q3-2023-vancouver-office-figures/Market Report: Q3 2023 Vancouver Office Figures2023-10-25T00:00:00-07:00BOMA BC Review:
JLL Q3 Office Insight Metro Vancouver
Colliers Q3 Vancouver Office Market Report
CBRE Canada Office Figures
Cushman and Wakefield Q3 Vancouver Office Report
Highlights:
Downtown Vancouver no longer the lowest office vacancy rate: Downtown Vancouver falls behind Toronto.
A tenant’s market: Elevated vacancy rates put tenants in the driver’s seat.
Healthcare overtakes Technology Sector in Vancouver: Slow leasing activity changing market dynamics.
Rents are dropping across Metro Vancouver: Stubborn market conditions are forcing landlords to drop asking rates.
The Greater Vancouver office market continues to face headwinds as companies, landlords and tenants continue to adjust to the post-pandemic reality. Vacancy rates remain elevated, and absorption rates were negative this quarter.
Nonetheless, the overall Metro Vancouver vacancy rate remains the strongest in North America with strong return to office levels.
Office quality, tenant preferences, and broader macro economic trends, are all impacting vacancy and absorption rates this quarter.
As the office market continues to soften, we are starting to see rents dip, and we are seeing a tenant’s market.
Elevated Vacancy Rates and Negative Absorption:
There is a consensus that vacancy rates remained elevated across Metro Vancouver in the third quarter of 2023. While there was some discrepancy in the level of change, there was a consensus that market conditions have not improved. Colliers noted that Downtown’s Vacancy rose to a 20 year high of 11.9%, with Metro Vancouver’s vacancy at a six year high of 8.6%. Downtown Vancouver has historically had the lowest office vacancy rate in Canada. According to Colliers, Downtown Vancouver has now fallen behind Downtown Toronto with an 11% vacancy rate this quarter. Cushman and Wakefield and JLL noted that vacancy rates across Metro Vancouver largely remained flat.In addition to elevated vacancy rates, negative absorption rates were a key theme this quarter. The absorption rate is the square footage of space leased. All market watchers noted negative absorption rates across Metro Vancouver this quarter.
Flight-to-quality, hybrid work, and new construction continue to drive vacancy rate:
As we’ve mentioned in previous quarterly updates, there are several factors negatively influencing Vancouver’s vacancy rate as we continue to adjust to new working models post-pandemic. There is a broad consensus among market watchers that many of these key factors are still present and disrupting the market, including the flight-to-quality, hybrid work, and new construction.Colliers noted that a significant amount of office space was returned to the market this quarter as business continue to adjust to a new work environment:“Many businesses continue to optimize their office space requirements to adapt to the growing prevalence of hybrid work arrangements and the changing nature of in-office work which led to a significant portion of office space that was returned to the market as sublease options, one of the factors contributing to the vacancy rate’s growing trend.” [1]Similarly, JLL also noted that companies continue to reassess their needs because of hybrid work models and overall daunting macroeconomic economic prospects. JLL specifically noted that many large office occupiers are exercising caution, contributing to unsteady office demand. Flight-to-quality has been a key theme since the pandemic as companies and landlords move into higher class space to incentivize a return to work. Cushman and Wakefield noted that flight to quality continues to impact Downtown Vancouver’s vacancy rate as Class A and AAA activity accounted for more than half of the new leasing volume this quarter. CBRE also noted that flight to quality is a key factor driving the vacancy rate:“Downtown vacancy increased 30 bps to 11.8% this quarter, the result of tenant relocations into best in-class premises from the latest new build cycle which is set to complete in 2024.” [2]JLL highlighted the impact of flight-to-quality on the vacancy rate, noting 680,000 sqft of positive absorption in Class A assets year over year. “It’s evident that build-out office spaces and amenity-focused buildings are seeing the most activity and may do so for the foreseeable future.” [3]
Which industries are driving the leasing market?
Vancouver has historically been known for a strong technology sector. However, there were changes to the leading industries leasing space this quarter. Last quarter, Cushman and Wakefield and Colliers attributed the decline in leasing activity partially to a reduced demand from the technology sector:“The demand for office space in the Greater Vancouver Area by the technology sector has been shrinking, from a peak of 50% among all industries in Q4 2021 down to 26% as of Q2 2023.” [4] This quarter, according to Colliers, healthcare has now overtaken technology as the leading sector in Vancouver:“The healthcare sector has now overtaken the technology sector for the very first time in a decade this quarter as the most active industry, seeking over 560,000 square feet of office space in the GVA.” [5] Cushman and Wakefield listed the top six key lease transactions for Q3 2023 in Metro Vancouver. It noted only one key technology sector transaction, Sage Software at 601 West Hastings, with the remainder in education, mining, and other sectors. Similarly, in NAIBC’s list of the top 9 significant transactions for downtown Vancouver in Q3 2023, Life Works was the only technology sector transaction at 411 Dunsmuir, with the remainder in mining, insurance, and education.
Metro Vancouver office Vacancy Rates
Decreasing rents - a tenant’s market
As vacancy rates stay elevated, some market watchers are noting that Metro Vancouver asking rents decreased this quarter. They analyzed what this means for tenants.According to Colliers, Metro Vancouver net rents decreased 1% this quarter, the first decrease in three years. Colliers noted that this is positive news for tenants: “As a result, tenants today have greater options when selecting an office and landlords are more willing to negotiate net rents, free rent periods, improvement allowances, and shorter lease terms in some cases to attract and retain occupants.” [6] JLL also highlighted how the current economic environment is creating favourable conditions for tenants noting that there are quality opportunities available: “Vancouver’s office market continued to move further into tenant favourable conditions, with an abundance of quality opportunities providing tenants with negotiating power not achievable during the tighter market conditions experienced over the past five plus years.” [7] As a result, according to JLL, landlords are dropping asking rates. It is important to note, however, that Cushman and Wakefield noted that asking rates have remained flat downtown, as new class AAA builds bit up average asking rates. Cushman and Wakefield noted that they expect downtown core asking rates to begin dropping if vacancy rates remain elevated.
Conclusion
While broader economic trends continue to impact the commercial real estate industry, this is not exclusive to Vancouver. Our market has continued to hold up better than other major markets and remains an attractive market in which to invest.
Source links:
[1] Colliers, Vancouver Office Market Report, Q3 2023[2] CBRE, Canada Office Figures, Q3 2023[3] JLL, Vancouver Office Market Report, Q3 2023[4] Colliers, Vancouver Office Market Report, Q3 2023[5] Colliers, Vancouver Office Market Report, Q3 2023[6] Colliers, Vancouver Office Market Report, Q3 2023[7] JLL, Vancouver Office Market Report, Q3 2023https://www.boma.bc.ca/about-boma/news/boma-bc-new-members-july-aug-2023/BOMA BC: New Members | July - Aug 20232023-09-13T00:00:00-07:00Join us in welcoming the following members to BOMA BC:
Real Estate Membership:
MNT Realty Inc.
Business Membership:
Allied Universal Security Services
Coast Mountain Roof
EcoGiants Cleaning Inc.
Marine Roofing
MCW Consultants
Norman, Disney & Young
PML Professional Mechanical
Test Roofing
Thrive Electrify
Troy Life & Fire Safety Ltd.
Victoria Business Membership:
Mountain Fire Protection