What does the year hold for tech real estate in Vancouver? Two experts weigh in
After a couple unpredictable years, Colliers and CBRE execs try to see the future.
Before COVID-19, Vancouverites were assured of three things: death, taxes, and ridiculously low downtown office vacancy rates. But while the pandemic didn’t have much effect on overall Vancouver real estate prices, its presence has been felt in the office.
With more people than ever working from home and the emergence of ubiquitous “Is the office dead?” think pieces, office vacancies in Vancouver’s downtown went from 2.6 percent at the end of 2019 to 7.4 percent in Q3 of 2021 (the most recent data available). It’s a big development for tech companies, many of which have the capacity to easily enable their employees to work from home. Some, like education software firm Thinkific have moved to an almost fully remote workforce.
Many are still grappling with the question of where their employees want to work, according to Colliers vice president Peter Muench. “I don’t think they’ve had time to crystallize what they want from the physical space,” he says. “So many of my clients are still in the position of having had an office and getting rid of it or are trying to defer planning around it until they know more from their employees.”
Size doesn’t matter (as much)
Muench doesn’t want to make definite conclusions, but he does think that offices will likely serve more purposes than they have before. “I think by and large, people will use less space going forward, but what’s more important than size is making sure people are fully able to do their jobs and fully able to participate in the culture of the company,” says Muench.
The office will have to start serving people up some of the comforts they enjoyed working from home. “It used to be that you’d come in, punch the clock, work until a certain time and then go home. Now work has bled into all aspects of life…It would be fundamentally unfair for companies to expect people to do emails at 7 p.m. and not give them the ability to do the things they would be able to take care of at home when at the office. So there’s going to be more of a focus on how you roll some of those work-from-home things into the office itself.”
Say there’s someone who values daycare, argues Muench. “I could see there being a situation where there’s more conversation around childcare in a physical workplace. If you think there’s no value in the physical environment, then it’s not a big deal. But if you think there is and you want to bring people back into the office, you have to take the things that they cherish and value at home and find room for them in the physical environment.”
CBRE vice president Alain Rivère agrees that companies are putting more thought into what their spaces can and should look like. “What’s been highlighted after the pandemic is that if you’re going to have an office, it has to be an awesome place to work, a place people want to go to and can generate all that collaboration,” he says. “So if you’re going to have one, a lot of companies—especially in tech—are looking to pay more to ensure they’re getting good buildings, good amenities—air quality and wellness is definitely talked about more.”
To that end, Rivère maintains that there are more people involved in the office decision than ever before. “It used to be the CEO and the CFO,” he says. “Now it’s them and HR that are the main decision makers, and other managers representing general employees and what they want. Flexibility is at the heart of these decisions still, especially with tech, where there’s a lot of overlap with different departments.”
Don’t call it a comeback
Rivère has a more optimistic outlook than Muench, and he points to recent developments as proof that companies are starting to get space back or expand on what they have. And fair enough, Rivère rattles off household names to the point where it feels like he’s detailing an all-star lineup at Coachella.
There’s American cloud management giant Workday, which leased approximately 27,000 square feet downtown in July, Best Buy’s planned new Canadian HQ in Mount Pleasant, and EA Sports’ takeover of MEC’s former HQ on Great Northern Way, along with companies like Animal Logic, Trulioo, Klue, PayByPhone, Semios Bio and Rivian.
“Big companies are coming into spaces,” Rivère says. “At the start of the pandemic they held off, now they’re back into them. And a lot of the smaller and mid-sized tech startups look at the big guys and see them making commitments, signing leases, making those big bets. Some are taking more, some are keeping their space, but less are giving space up.”
The industry’s the thing
As for which specific industries will be on the lookout for expansion, Muench is seeing a good portion of action from video game companies, as well as VFX and animation studios. “Certainly there will be traditional SaaS companies, companies with more software to them,” he says. “They’re growing as well and taking more space. But my guess is it will be more concentrated around video game companies and VFX.”
Rivère, meanwhile, is predicting a “very positive amount of activity” in the market for tech and knowledge-based companies. He lumps in software, hardware, manufacturing, testing, research and development firms, biotech and life sciences into that group, as well as visual effects and film and TV.
Rivère notes that life sciences in particular has seen something of a boom in activity in the city, partly because of AbCellera’s plans for a massive new Mount Pleasant HQ.
“That sector’s been kind of slow in the last decade or so,” he says. “But developers are seeing companies like AbCellera take down big chunks of space and are feeling the demand. The reaction is ‘let’s build offices, but let's also build lab purpose space—buildings that have the infrastructure to meet the needs of life sciences companies.”
Those needs include things like extra air ventilation, extra power, bigger elevators and bigger machinery, according to Rivère. “It’s a whole other sector that’s growing, planting a foot in the East Van/Mount Pleasant area, with investments from developers in real estate to build those buildings. We won’t see those for a few years still, but it’s happening, so that’s good.”
Overall, Rivère isn’t worried about the WFH revolution. “Companies want space now,” he states. “Whether they’re doing it or not, that’s where they’re headed.”