When the design for Cadillac Fairview Corp.'s new office tower on the Vancouver waterfront came to public attention this year, many were startled by what became known as the "origami" building.
Ultra-modern, with windows angled like the facets of a diamond, and pressed right up to and leaning over the city's historic Waterfront Station – Vancouver's version of Toronto's Union Station – the building provoked debates about whether it was just too much: too modern, too big, too jarring.
What no one seemed surprised or curious about, though, was what motivated Cadillac Fairview to propose yet another office tower in Vancouver. After all, nearly a dozen office towers have been approved for the city's downtown core in the past four years – one whose tenants just started moving in, several nearing completion and a couple yet to begin construction – and some of the newest entries have no or just one tenant in sight.
By the end of 2014, the office vacancy rate was 6.9 per cent and the downtown had also seen its highest negative absorption – decline in total office space leased – since 2009, according to the end-of-year report from commercial brokerage Avison Young. One of the largest towers under construction, the 360,000-square-foot Exchange tower, by Credit Suisse, has leased just 45,000 square feet so far, to National Bank.
Yet Cadillac is bowling along with its proposal, as are seven other major downtown property owners, all of them moving steadily through the city's multilayered approval process. That makes this a third distinct wave of office development in Vancouver in four years, after a nearly decade-long drought.
What's propelling it? New tenants are apparently on the horizon. Developers don't want to be unprepared, as happened four years ago, when it suddenly became clear that some of the city's bigger clients were ready to expand and move but hardly any new space was available. And this time people don't want just any old space that's vacant. They're longing for the latest thing.
"There's a lot of pent-up demand for new product," said Edward Archibald, director of development and construction for Serracan Properties. "Even though the vacancy rate is high, we're still seeing a lot of demand. We're looking at other opportunities, because that demand, it just keeps coming."
The average age of a triple-A office building in Vancouver is 25 years, dating to the last big downtown boom. During the 2000s, when essentially nothing in this category was built in Vancouver, office-tower aesthetics and sustainability techniques went through huge leaps in other cities. Now, there's a chance to lease something shiny and new and tenants want it.
Serracan is building a boutique 70,000-square-foot tower at the corner of Pender and Seymour streets, an intersection on the eastern edge of the central business district and two blocks from the main transportation hub downtown.
Like a couple of other towers under construction, it has the smaller floorplates that are attractive to Vancouver's smaller-company, non-head-office culture. (Oxford Properties Group Inc.'s MNP Tower, which kicked off the first wave of tower development in 2011 and is now just being occupied, also has small floorplates, which was attractive to mining company Silver Wheaton Corp., Dassault Systèmes Canada and Atimi Software Inc.)
Serracan also offered tenants the opportunity to participate in designing the space while the building was being planned. That appealed to new tenants Onlineshoes.com, Hardy Capital and Adler University.
"In this third wave [of office building in Vancouver,] there's a little bit more customization," said Mr. Archibald. "It's the same as in the condo world."
But there are also quite a few firms looking for something big.
"We've seen an extremely large number of large tenants on the market," said Maury Dubuque, the managing director at Colliers International.
Of the 100-plus companies appearing on the commercial-brokerage world's list of tenants looking for office space in the region, 16 need something substantial.
Yoga wear company Lululemon Athletica Inc., currently operating out of a former Coca-Cola bottling plant in Kitsilano, the beach neighbourhood near downtown, is looking for 300,000 square feet. Vancouver's social-media star Hootsuite Media Inc., which moved into a former city police building in Mount Pleasant just three years ago, has outgrown that, as it doubles its work force on a regular basis. Nerd Corps Entertainment Inc., a booming animation studio now located in an industrial area east of downtown, is on the hunt for 100,000 square feet, as is Nature's Path, a natural-foods producer.
Not all of them will necessarily end up downtown. But the city's downtown is still the healthiest office market in the region. Suburban markets had vacancy rates ranging from 8 per cent (the North Shore) to 22 per cent (Surrey) by the end of 2014.
As well, said Mr. Dubuque, the new buildings going up downtown are designed in a way that allows tenants to put more people in less space: more open, more flexible. Tech companies that have already decided to locate downtown, such as Sony, Microsoft and Amazon, have also helped to fuel the sense that downtown is the place to be.
"There are more and more tech companies nosing around," Mr. Dubuque said.
Even if those don't all pan out, brokers say that everyone wants to be ready this time around, in case there is a surprise appearance of a new, large tenant.
When the first-wave towers were proposed in 2011 and 2012, those landlords nabbed several major tenants who had grown out of their space and who found themselves with nowhere to go in the city's tight market.
The developers of the eight new buildings being proposed "are in the best position to catch these potential new tenants," said Glenn Gardner, a principal in the office division of Avison Young. "Landlords are trying to avoid what happened last time, where they ended up playing catch-up."
Many of the new proposals are from large institutional landlords, such as Cadillac Fairview, who just want to get everything ready, even if they hold off building until the next wave.
For Vancouver's general manager of planning, the apparent non-stop building boom is a vindication of city policies.
Until the late 2000s, the city had a flexible policy of allowing developers to build office or residential in some areas on the edge of the traditional downtown business area. It ended that policy, instituting strict office-only areas, and new office development started a couple of years later.
"That stabilized the land prices," said Brian Jackson, general manager of planning and development, whose office has approved 1.8 million square feet of development that will take place to the end of 2015 and another three million square feet that has been approved but not built. The planning department also has another 1.5 million square feet from applicants who have submitted proposals but haven't been approved.
And, said Mr. Jackson, he's starting to get informal inquiries from owners of small, older buildings downtown.
"They want to know, 'Can we tear that down and build a 30-storey tower?'"