Our Second Quarter Report for the Vancouver submarket is out and the news is less than uplifting. All of the Vancouver submarkets are now in double digit territory for vacancy rate. Rental rates are still on a steady decline while tenant improvement allowances are becoming more challenging to pencil out for landlords. Lease terms are shorter, 2-3 years, with most tenants exercising renewal options as they remain in a “wait and see” mode.
Office Vacancy Rates
With the recent announcement of Nautilus giving back nearly 400,000 square feet of space, the increase in available space in the Cascade Park submarket is nearly doubled from the previous quarter. The likely tenant candidate is a large company, from outside of the region, seeking a campus-like setting and tax breaks. This will not be an easy challenge to tackle in the current economic climate.
Office Rental Rates
Investment Opportunities
New on the market, Evergreen Plaza (611 W Evergreen) is one of the few opportunities available with a stronger tenant mix ( State and County agencies). The current asking price on this 64,975 SF property is $6,090,000 with projected returns of:
Year 1 Return: 13%
Projected 15 Year Cash Flow: $16 million
Projected 15 Year Tax Savings: $6 million
IRR: 13%
The Columbian remains tied up in legal discussions and fairly inactive from a new tenant perspective due to the uncertainty of ownership.
For a copy of the complete report, email me with Vancouver Snapshot in the subject header.
kristin.hammond(at)pacific-re dot com
