Vancouver’s office market is the next stop for global real estate firm Hines following the completion of its master-planned Park Central community in Calgary’s Beltline neighbourhood.
Together with Reliance Properties Ltd., Hines is preparing to begin construction on 1166 West Pender, a 32-storey office project announced in 2022. Demolition of existing structures on the site took place in summer 2022, a year after Hines joined forces with Reliance to take the project forward. Reliance acquired the site from Greystone Management Investments Inc. in 2016.
“We need to get this building underway because there’s going to be a shortage of office supply at the back end of 2025, into 2026 if we don’t move this building ahead,” Reliance president Jon Stovell said two years ago.
Hines told Western Investor that the 1166 West Pender site is shovel-ready, with planning well underway. Hines is currently pre-leasing (no deals have been signed yet, however) and expects to begin construction in the near future.
The project is Hines’ first in Vancouver but the company has been active in Canada for nearly 20 years. Park Central has 993 rental apartments as well as street-level retail units. Combined with third-party contracts, Hines manages approximately 1,300 residential units in Calgary.
Pre-leasing efforts come as office vacancies begin to top out.
“Office leasing volumes have been really steady; they’ve actually picked up compared to last year, so we do feel like we’re getting to the end of the cycle where tenants are going through right-sizing,” Jason Kiselbach, managing director in Vancouver with CBRE Ltd. told Western Investor last month.
Third-quarter statistics from CBRE show vacancies of 10.9 per cent in Metro Vancouver, up from 9.6 per cent a year ago. However, downtown Vancouver landlords saw vacancies of 11.8 per cent, even with a year ago.
Triple-A space was the only segment to see vacancies decline versus a year ago, falling a percentage point to 11.3 per cent.
This countered a return of space across all classes in the third quarter, led by the return of space at 745 Thurlow Street as Amazon completed its move to the south tower of the Post at 349 West Georgia Street.
A number of smaller spaces also came back to market, driving rising vacancies in B and C spaces that have been the most challenging to lease while vacancies and options for tenants remained high.
The two lower-tier classes of space are the only ones to see negative net absorption this year, with tenants giving up close to 190,000 square feet downtown.
While conditions in suburban markets vary, a similar phenomenon is playing out in the region as a whole.
Metro Vancouver’s office tenants shed nearly 214,000 square feet of B and C class space through the end of September.
Meanwhile, suburban tenants have shown less appetite for top-tier space, with the return of more than 138,200 square feet of triple-A space countering the gains posted downtown.
