Businesses vacated commercial office space slightly faster than it could be re-filled in Vancouver during the three months ending in June, according to real estate data issued this week.
An additional 11,634 square feet of office space came onto the Vancouver office market in the second quarter 2010, according to the Norris Beggs & Simpson Market Summaries report for the second quarter. The quarter marked a reversal of gains made in the first quarter, when 42,644 square feet came off the market due mainly to the leasing of the former Red Lion headquarters building in Vancouver.
The trend toward higher vacancy rates could continue, as city workers prepare to move out of more than 118,000 square feet in office buildings throughout Vancouver and settle into a new city hall in the former Columbian building at 415 W. Sixth St. The city’s current headquarters at 210 E. 13th St. hasn’t yet been counted as part of the local market’s office space inventory, Qualman said.
The city would occupy less square footage after the transfer, which could boost Vancouver’s already high office vacancy rate, said Roger Qualman, a Vancouver-based executive vice president of NAI Norris Beggs & Simpson commercial real estate firm.
In the meantime, other office tenants cut back and some returned unused office space to the market, responding to economic conditions that have forced downsizing and consolidation in the workplace. Qualman said even financially healthy companies are using smaller offices and signing smaller leases, not expecting to hire.
Of 3.95 million square feet of office space in Vancouver, 18.55 percent was vacant, according to Norris Beggs & Simpson’s Market Summaries report for the second quarter. The vacancy rate was up by more than 2 percentage points from the same period last year.
“It all circulates around job creation,” Qualman said. “We’ve got to create jobs somewhere or recruit new businesses here in order to improve our outlook.”
Improvement could happen by this time next year, said Qualman, who thinks Vancouver will follow trends being set in larger U.S. cities. In some, office markets are already showing signs of improvement.
“The bigger cities — New York, Boston, L. A. , San Francisco — they are all reporting more leasing going on, and the Pacific Northwest always follows,” he said.
Qualman also said a stabilizing international economic situation and an upturn in the national economy that has raised corporate earnings could drive the nationwide recovery and drive down vacancy rates in the local office market.
However, he does not foresee a full-blown recovery until 2011.
Until then, leasing activity could remain in the doldrums, Qualman said.
“It is sort of at a low ebb. There is very little activity, partly due to the summer,” he said. “There’s just not that much going on.”