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Real Estate News

Richmond, BC Has Always Been More of a Business Park-Focused Office Market – That’s Changing

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The desire to build suburban office towers, particularly on rapid transit lines, may have gotten a boost from pandemic-induced work-from-home orders.

Richmond sits on British Columbia’s Lower Mainland but there hasn’t been much commercial office construction in years. However, with One Park, that appears to be changing in the city, which has had stops on the SkyTrain’s Canada Line since August 2009, that’s known more for being home to Vancouver International Airport.

“I think it’s a bit of a shift in the Richmond marketplace where, for years, Richmond was always more of a business park-focused office market. Over the course of the last 20 years, office parks are where all the construction was for Richmond’s offices, but with the SkyTrain now coming into Richmond’s city centre, that’s a bit of a game changer and that’s where we’ve seen the shift,” Luke Gibson, a Senior Vice President at CBRE Vancouver, said. “It takes a while to get these projects titled, off the ground and into construction, and we’re seeing just the first major mixed-use projects coming out of the ground now. There wasn’t as much demand for traditional business park suburban office space 10 years ago, and that’s why we’re seeing construction projects hitting now.”

Gibson says that mixed-use suburban developments were where the market was trending pre-COVID-19, and for that reason he is apprehensive about crediting remote work as the catalyst for rising suburban office demand since long commutes into urban cores are no longer considered necessary. Still, he concedes that suburban office demand caught up to the urban core during the pandemic.

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But Ken Kwan, Project Director for Grand Long, One Park’s developer, believes the pandemic has already shifted demand long-term from downtown cores to suburbs.

“I believe the pandemic will shift office demand to the suburbs from downtown because, by cutting down commute times, there’s an increase to spending quality time with the family,” he said. “Downtown is becoming very expensive and suburbanization is a trend that cannot be reversed, in my humble opinion.”

A bylaw in Richmond proscribes building towers taller than 16 storeys because they could interfere with flight paths to Vancouver International Airport, whereas Burnaby and Coquitlam, where the populations are growing commensurately with Richmond’s, allow up to 90 floors. Kwan resultantly expects a slew of office tower construction in Richmond.

“The Lower Mainland is one of most popular places for immigrants and population growth in city centre areas is very significant. Ten years ago, we had 15, 20 towers and in 15 years we’ll probably have hundreds. Population growth is very significant in this central area,” Kwan said.

Moreover, Richmond is replete with strata office units, for which its large Asian community has a predilection, but much of the city’s stock is over three decades old. Moreover, much like Vancouver is not a head office city, Richmond is a community full of small businesses.

“Most companies here are in trading and they’re small financial outfits, consultants and things like that, so our office base is strata and 500-1,000 sq. ft., with most being around 600 sq. ft. because they’re designed to cater to the needs of small businesses,” Kwan said.

One Park, which is slated for tentative occupancy in Q3-2023, will be composed of three mixed-use towers, including Class-A offices, on No. 3 Rd, and it’s also part of the City of Richmond’s larger plan for more development along the Canada Line. The neighbourhood itself, with its proximity to Richmond City Hall and a slew of amenities, is expected to see much more development in the years ahead, even if it has, curiously, been mostly absent hitherto.

“It’s funny, in a lot of other markets where they announced SkyTrain lines, you have projects falling on the heels of the lines being completed, but there has been a slow trickle of projects in Richmond,” Gibson said. “There are still availabilities out there in the suburbs, so I wouldn’t say we’re in a supply crunch but for new good construction opportunities I would definitely say that we’re lacking as many good options as some of the other urban centres. These rapid transit sties are where the bulk of the new construction will be in Richmond.”

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