After 12 years in Toronto with commercial real estate brokerage Avison Young, Brett Armstrong relocated to the west — i.e. the best — coast last summer, trading what has turned out to be quite the brutal winter in Ontario for a relatively snow-less winter here in British Columbia.
Since then, Armstrong has been elevated from Principal & SVP of Leasing to Principal & Managing Director, officially taking over the helm of the Vancouver office — Avison Young's second-largest in Canada — on December 2 from Jessica Toppazzini (who recently joined CMLS Financial as VP and Managing Director of Western Canada).
In an interview this week, Armstrong told STOREYS about why he decided to relocate, differences and similarities between the Vancouver and Toronto markets, and various commercial real estate topics.
Responses have been lightly edited for length and clarity.
You were with Avison Young's Toronto team for 12 years. Why the move to Vancouver?
Toronto was an incredible place to grow up in and grow my career. I really enjoy Toronto and I was fortunate enough to have a great brokerage career there and work on some high-profile assignments. But, ultimately, we knew we wanted to be in Vancouver for a few years now. My wife and I have family in Vancouver, so we've spent a lot of time here over the last 10 or 15 years. So I would say the main driver of coming out here was really a lifestyle change. We've always enjoyed the outdoors and the mountains. It's just something we've always wanted to do and, you know, to make a pivot like that is very challenging, but it's something that we've been planning for a while and just decided to do it.
So more personal than professional.
Yeah, definitely personal. But on the professional side, from Toronto, we've always admired the Vancouver Avison Young office. It's always been an office that has done incredibly well. So, from a professional side, it's definitely made the transition a lot easier, but definitely I would say it's a lifestyle decision to move out here.
We've really been enjoying it. We've been fortunate enough to have a good network here already, so the transition wasn't a complete shock. We've been really just spending the summer and the winter enjoying everything that Vancouver has to offer. Getting up to the mountains, taking up new hobbies and building back up both my wife and I's professional network and personal network and really taking in the city. It's been really good to us.
Have you two found any favourite spots yet?
We do frequent Whistler. We try to get up there most weekends. We're both snowboarders, so we've been up there enjoying the winter and trying to experience different areas around Vancouver. Going up to the Island. Exploring areas like Tofino. We have a very active dog, so we do a lot of hiking on the trails and it's been awesome.
From a commercial real estate standpoint, have you seen any notable differences, whether it be how things work or market dynamics?
I think that the two cities are very similar from a real estate perspective, but there are some subtle differences I've noticed. Vancouver has a really strong tech sector, which I've come to realize. I would say on the ownership side of real estate, there's a lot of similarities as far as the key institutional and pension fund players here. It's been nice to kind of leverage some of those relationships that I had in Toronto. But definitely more private capital in this market than Toronto.
I would say generally the market here, even though it's had its ups and downs the last few years, is relatively very healthy compared to Toronto. Definitely a much lower vacancy rate. Return-to-office seems to be very strong here relative to what we experienced in Toronto, which I think is the great. And it's definitely a very sophisticated market. I was impressed with hearing some of the transactions our team are working on here with how the deals are put together and how tenacious some one the owners are here. It's been very impressive to be a part of.
I always like to ask people with experience in both Ontario and BC about strata office and industrial units. I know there are some in Ontario, where they're called office or industrial "condos," but they are less common. What do you make of that?
Definitely a lot more prominent here than Ontario. It's funny that the key difference is that out here it's called strata and in Toronto it's called a condo. But it's definitely a lot more common here, both the office side and the industrial type side. In Toronto, you're actually starting to see more of that in the marketplace recently. Definitely on the industrial strata side, slowly on the office side, but definitely a lot more of it in this marketplace.
Last year we saw a couple of big office sales (the two Oxford offices, M2, Telus Garden) and CF recently listed two offices. Do you see any common threads between these examples and where do you think the Vancouver office market currently stands?
We're actually seeing a lot of these kind of sales across the country, not just in Vancouver. It's important to note that Cadillac Fairview and Oxford Properties — these are global real estate companies, so they're constantly looking at ways to reinvest and redistribute their capital.
Looking at the Cadillac Fairview examples, they're the largest landlord of AAA-class buildings in Vancouver. And these two assets kind of fall [outside] that category. They're B-class buildings in downtown, so I think it's a prime example of them looking at their portfolio, looking at the trends with flight to quality, looking at the assets that are performing and that they believe in moving forward. So I think this is more of a strategic initiative to kind of redistribute some capital into maybe some other asset classes. They're doing the same thing in Toronto right now with the Yonge Corporate Centre complex, which is exactly the same thing. It's not located downtown, it's a different asset class. So I think you're seeing this a lot across the country, you're seeing this a lot across the US, and it's just very smart and sophisticated landlords that are looking at ways to redistribute their capital and balance their portfolios.
From a leasing perspective, I know we've had notable trend as it relates to subleasing. Where is the trend of subleasing now relative to the last few years?
We've seen it decline from its peak for both industrial and office, which is a good sign. Going back to the height of COVID, the office market for example, these subleases represented 27% of all vacant spaces in Vancouver in the second quarter of 2023. We're now down to 16%, so I think that's the indication of the healthiness of the market and the market adjusting and eating up to vacancy that that has been available.
I would say the trend has been really good quality subleases, with term remaining, with nice improvements in nicer quality assets. They're leasing and they're leasing at really great recovery rates and they have great demand. I think it's no different than direct spaces — the spaces that might be sitting [vacant] are the spaces that are older assets, maybe do not have as nice improvements in place. So I would say specific to subleasing, we are seeing the amount of subleases decline.
In terms of the new development pipeline, we had a large group of AAA office towers complete a few years ago and there's now a lull in the pipeline. What do you think would need to happen for the pipeline to pick back up?
I think the reason why a lot of developers have not moved forward with anything on spec right now or launched any project has a lot to do with activity and has a lot to do with construction prices. I think we need construction prices to normalize, but we also need activity to pick up and vacancy to go down so that the economic terms of a new development can make sense.
I think it's going to be many years before we see a new development that is built. There really only is one that could go right now that's being developed by Reliance and Hines. But even if they were to start building that right now, it's going to be many years before it can actually come out of the ground. I think this is why a lot of larger tenants are starting to do things many years in advance of their lease expiration. It's because their leverage in the market is typically new development, if you're over 100,000 square feet, so the fact that there really isn't anything coming on the market soon or being built soon, I think it's telling to why these tenants are starting to think many years in advance to maintain their leverage.
What do you have your eye on in 2025?
We're continuing [to monitor] the Bank of Canada's interest rates and what's going to happen there. I think their decisions coming up will be a real kind of indicator of where the investment business is going to go. We hope to see some increased activity in the capital markets world, so that will be interesting to keep our eyes on.
I think the common trend that I'm sure you've heard many times is flight to quality. I think this is going to continue to be prevalent in 2025. One thing that we're finding interesting in the Vancouver market for both office and industrial is the large tenant activity. The activity for large tenants has increased to start off this year. On the office side we're seeing many landlords getting creative to maybe renew tenants three, four, or five years in excess of their lease expiration. That's kind of interesting. We're also seeing, on the industrial side, activity over 100,000 square feet drastically increase to start off the year. I think those are good positive signs and telling for what's going to happen and later on this year.
In terms of your new role, I saw that the press release in November mentioned that you will also "focus on revenue growth and market share." What does that look like and what else will you be focusing on?
I think generally it's really supporting our teams and helping them grow in their business and win more business. I think I'm uniquely positioned — I was a broker for 12 years in Toronto and I've been fortunate enough to work on some really great deals and complex assignments, so I think using my experience to really help our brokers across all of our different asset classes to grow their businesses is really one of my key focuses right now.
Really working with our younger brokers is something that I cherish and I'm excited for. When I was in Toronto, I was the practice leader for the leasing team, so I spent a lot of time with our younger brokers and really worked with them on how to grow their careers and take themselves to the next level. That's a big focus of mine right now as I start off this position.
