The $240-million Credit Suisse/SwissReal tower in the heart of downtown Vancouver will be completed in less than a year, but so far, only one tenant has signed up to move in.
The tenant has committed for a 10th of the 370,000 square feet – leaving a state of emptiness that is unusual for an office skyscraper in this city. Even so, a huge shift in business tenancy is expected as the region experiences something it has not seen before: an office-tower building boom much of which is speculative construction rather than for specific committed tenants.
"This is kind of uncharted territory for Vancouver," said Mehdi Shokri, a principal with the capital markets team at Avison Young. "But I don't see a big disaster occurring."
The Credit Suisse tower is only the most visible and furthest along of a second wave of new office towers planned for Vancouver and some key suburbs. A first cluster of towers – some two million square feet – was built downtown in the past three years.
Another 11 office developments are proposed within blocks of Credit Suisse's Exchange tower at Howe and West Pender streets, even while the office-vacancy rate in the region continues to inch up as a result of the first wave of building.
But commercial brokers say the city is not about to be populated by ghost towers.
Mr. Shokri and others say they expect many of the new towers to start signing tenant leases as they get closer to completion. That is partly because companies in Vancouver, which do want to be in new, energy-efficient buildings, tend to operate on short timelines.
As well, he said, prices in the new buildings will likely come down in the next two years due to competition.
The landlords who will likely suffer as a result of the current boom are owners of older buildings, Mr. Shokri said. As well, new developments in the suburbs, which have already experienced higher vacancy rates in recent years, may have trouble as they compete with each other.
In Vancouver, the co-developer of the Credit Suisse tower is optimistic his building will start to fill as the completion date gets closer.
Franz Gehriger, the CEO of SwissReal Group who bought the original historic stock-exchange building in 2002 before partnering with Credit Suisse to develop it, said the main group interested in leasing Vancouver office space these days is the technology sector. Those companies make their decisions just a year before they need to move in.
And, he said, all signs indicate non-Canadian companies are looking for space here.
"Vancouver is on the world map now. We get a lot of calls from California and Seattle of companies that are considering coming here," Mr. Gehriger said.
Some brokers say the building has had trouble signing tenants because of its unusual design. It is being attached to the existing heritage building, with the new tower starting on a narrow base next to it and then widening out above the older building.
That complicated design did slow construction somewhat, but Mr. Gehriger said "most issues are resolved now."
He also just switched leasing agents, from CBRE to JLL, at the beginning of the new year, which has prompted local speculation about what is happening with the building.
JLL vice-president Mark Chambers said his company plans to roll out some new strategies for marketing the building, including sophisticated analytical tools that show companies how much they benefit financially by being in energy-efficient buildings that are better designed for their employees.
The Credit Suisse tower will be LEED Platinum, the highest rating on the energy-efficiency scale used for many buildings in North America.
Mr. Chambers, who also marketed the extra space in the recently occupied Telus head office on Georgia Street, said people have been predicting disaster for the Vancouver office market for several years, saying the region would never be able to absorb all the new offices being produced.
But the gloomy predictions turned out to be inaccurate, as new technology companies, notably Amazon, Sony, and Microsoft, arrived to lease big chunks of space.
"I don't think we've reached a limit," Mr. Chambers said. "We've become a global city."