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2009 Roll Office Market Roundtable

2009 Roll Office Market Roundtable. Hosted by: BC Assessment. October 30 th , 2008. Agenda. Welcome & Introduction – Dharmesh Sisodraker BC Assessment Quick Facts Office Rents Vacancy and Expense New Construction and Absorption Sales Evidence and Overall Capitalization

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2009 Roll Office Market Roundtable

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  1. 2009 RollOffice Market Roundtable Hosted by: BC Assessment October 30th, 2008

  2. Agenda • Welcome & Introduction – Dharmesh Sisodraker • BC Assessment Quick Facts • Office Rents • Vacancy and Expense • New Construction and Absorption • Sales Evidence and Overall Capitalization • Summary of Office Assessment Methodology • Comments and Thoughts

  3. BCA’s Commitment To You • New leadership focussed on advancing customer service • BCA is committed to working with you to create fair and equitable assessments. • BCA wants to make sure you experience no surprises with your upcoming property assessments and subsequent tax notices.

  4. BCA’s Commitment To You • We strive to be as transparent as possible by clearly demonstrating how we arrive at assessed values. • We are committed to providing you with as much information as possible – and addressing any issues – in advance of the assessment roll to help you make informed business decisions and to help us fine-tune assessments through pre-roll consultations.

  5. BC Assessment Quick Facts – Looking Back • 1.93 million properties assessed with value of about $936 billion • translates into about $7 billion in property taxes

  6. Office Lease Asking Rates – Vancouver Source: Altus Insite

  7. Office Contract Rent – Downtown Core Source:BCA

  8. Office Lease Asking Rates – Suburban Source: Altus Insite

  9. Office Face Rates - Suburban

  10. Office Lease Rates – Industry Quotes • Two thing are clear: the vacancy rate is very tight at 2.5% [in the downtown core] but rental rates peaked somewhere around the end of the second quarter and have been generally flat since then. Barkley Street Real Estate – Q3 2008 Office Space Survey • Metro Vancouver continued to display strong market fundamentals in the third quarter of 2008, despite the global economic slowdown. CBRE Marketview Metro Vancouver Office Q3 2008

  11. Office Rent • Comments? • Thoughts?

  12. Vacancy Rates • BCA Assessment uses a long term stabilized vacancy rate for sales analysis and valuation purposes • Generally we consider vacancy over a 5 to 10 year horizon.

  13. Expense Rates • Encompasses expense for: • Un-recovered Op Costs and Taxes • And for an allowance for Structural Repairs

  14. New Office – Under Construction Jameson House 830 W. Hastings, Vancouver Total Office Area: 55,000 sq. ft. Available: 22,161 sq. ft. Cross Roads Complex 525 W. Broadway, Vancouver Total Office Area: 85,000 sq. ft. Available: Fully Leased Completion: Jan 2009

  15. New Office – Under Construction Broadway Tech Centre #5 2930 Virtual Way, Vancouver Total Office Area: 75,000 sq. ft. Available: 75,000 sq. ft. Asking Rent: $30.50 Broadway Tech Centre #7 2940 Virtual Way, Vancouver Total Office Area: 75,000 sq. ft. Available: 25,000 sq. ft Asking Rent: $30.50

  16. New Office – Under Construction 699 Howe St, Vancouver Hotel Georgia Total Office Area: 70,500 sq. ft. Available: 70,500 sq. ft.

  17. New Office – Under Construction Willingdon Park Phase VIII 4350 Still Creek Dr., Burnaby Total Office Area: 92,509 sq. ft. Available: 92,509 sq. ft. Asking Rent: $27.50 Willingdon Park Phase IX 4370 Still Creek Dr., Burnaby Total Office Area: 92,509 sq. ft. Available: 92,509 sq. ft. Asking Rent: $27.50

  18. New Office – Under Construction Discovery Green Building 4200 Canada Way, Burnaby Total Office Area: 150,000 sq. ft. Available: Fully Leased Commerce @ Citi 4445 Lougheed Hwy, Burnaby Total Office Area: 110,000 sq. ft. Available: 108,000 sq. ft. Asking Rent: $32.00

  19. New Office – Under Construction Lake City Centre 3292 Production Way, Burnaby Total Office Area: 108,966 sq. ft. Available: 98,284 sq. ft. Asking Rent: $23.00 - $27.00 Metro Tower III 4730 Kingsway, Burnaby Total Office Area: 398,000 sq. ft. Available: 398,000 sq. ft. Asking Rent: $40.00

  20. New Office – Under Construction Westminster Centre South 505 6th St., New Westminster Total Office Area: 54,000 sq. ft. Available: 7,000 sq. ft. Asking Rent: $27.00 North Shore Corporate Centre 111 Forester St, North Vancouver Total Office Area: 30,000 sq. ft. Available: 15,000 sq. ft. Asking Rent: $28.00

  21. New Office Development - GVRD • 13 Buildings with approximately 1.4 million sq.ft. of total office space currently under construction in the Greater Vancouver area. • 3 buildings totalling 235,000 sq.ft. along the Broadway Corridor in Vancouver • 2 buildings totalling125,500 sq.ft. in Downtown Vancouver • 6 buildings totalling 951,984 sq.ft. in Burnaby • 1 building of 30,000 sq.ft. in North Vancouver • 1 building of 54,000 sq.ft. in New Westminster • Asking rents between $23 and $32 per sq.ft.

  22. New Office – Pre-Leasing Gateway Office Park 108th & City Parkway, Surrey Total Office Area: 638,500 sq. ft. Available: 638,500 sq. ft. Five Buildings Southridge Square 15844 24th Ave, Surrey Total Office Area: 36,705 sq. ft. Available: 36,705 sq. ft. Sea Island Business Park Richmond Total Office Area: 675,000 sq. ft. Available: 68,165 sq. ft.

  23. New Office – Pre-Leasing 801 Harbourside Dr North Vancouver Phase 1 Area: 57,000 sq. ft. Phase 2 Area: 75,000 sq. ft. Available: 132,000 sq. ft 100 E. Esplanade, North Vancouver Total Office Area: 51,800 sq. ft. Available: 51,800 sq. ft.

  24. New Office – Pre-Leasing 8980 Nelson Way, Burnaby Total Office Area: 57,861 sq. ft. Available: 57,861 sq. ft. Asking Rent: $25 .00- $28.00 4488 Halifax St., Burnaby Total Office Area: 68,165 sq. ft. Available: 68,165 sq. ft.

  25. New Office – Pre-Leasing 680 Terminal, Vancouver Total Office Area: 153,300 sq. ft. Available: 153,300 sq. ft. Asking Rent: $26.00 - $30.00 Marine Gateway 8440 Cambie, Vancouver Total Office Area: 310,000 sq. ft. Available: 310,000 sq. ft. Completion: Q4 2013 428 Terminal, Vancouver Total Office Area: 68,165 sq. ft. Available: 68,165 sq. ft.

  26. New Office – Pre-Leasing Bentall 6 745 Thurlow, Vancouver Total Floor Area: 399,052sq. ft. Total Office Area: 358,162 sq. ft. On Hold Georgia St. at Griffiths GM Place Tower, Vancouver Total Office Area: 280,000 sq. ft. Available: 250,000 sq. ft.

  27. Office Pre-Leasing – Greater Vancouver • 12 Projects with approximately 2.8 million sq.ft. of office space currently in the planning phase in the Greater Vancouver area. • 2 buildings totalling 679,052 sq.ft. in Downtown Vancouver • 3 buildings totalling 531,465 sq.ft. in Vancouver outside the Downtown Core • 2 projects totalling 675,205 sq.ft. in Surrey • 1 project totalling 675,000 sq.ft. in Richmond • 2 projects totalling 183,380 sq.ft. in North Vancouver

  28. New Office Space - Under Construction Source: Collier's Metro Vancouver Report Q3 2008 Office

  29. New Office Development – Industry Quotes • Regardless of construction uncertainty, overall leasing activity in the suburban markets was strong this quarter with 148,920 SF of positive absorption CBRE – Market View Metro Vancouver Office Q3 2008 • This is the first time in Vancouver’s 40-year history of significant Downtown office building development that a tight office market has not been closely followed by the completion of new office buildings adding to greater supply. Collier’s – Metro Vancouver Report Q3 2008 Office

  30. Vacancy, Absorption and New Construction • Comments? • Thoughts?

  31. Recent Office Transactions Crestwood Corporate Centre Commerce Parkway, Richmond • July 2008 • Reported Sale Price - $209.35 M • 9 Buildings • 756,916 sq. ft. GLA • $277 per sq. ft. GLA • Est. cap rate range – 5.5% to 6% • “A” Class Office Building

  32. Recent Office Transactions CSA Building, Richmond 13799 Commerce Parkway • April 2008 • Reported Sale Price - $17.75 M • 60,476 sq. ft. GLA • $294 per sq. ft. GLA • Est. cap rate range 5.75 to 6.50% • “A” Class Office Building

  33. Recent Office Transactions 4370 Dominion, Burnaby • July 2008 • Reported Sale Price – $11.3 M • 62,519 sq. ft. GLA • $181 per sq. ft. GLA • Est. cap rate – 6.50 to 7% • “B” Class Office Building

  34. Recent Office Transactions 3175 Willingdon Green, Burnaby • Sept 2008 • Reported Sale Price - $11.5M • 46,782 sq. ft. GLA • $246 per sq ft GLA • Est. cap rate range – 5.75 to 6.5% • “A” Class Office Building

  35. Recent Office Transactions Lake City Centre, 3292 Production Way, Burnaby • July 2008 • Reported Sale Price - $35 M • 108,966 sq. ft. GLA • $321 per sq ft GLA • Est. cap rate range – 6.50 to 7.0% • “A” Class Office Building

  36. Recent Office Transactions 9500 Glenlyon, Burnaby • Closing Date Aug 2008 • Reported Sale Price - $66.65 M • 164,580 sq. ft. GLA • $405 per sq ft GLA • Est. cap rate range - 5.75 to 6.25% • “A” Class Office Building

  37. Recent Office Transactions 100 West Pender, Vancouver • Mar 2008 • Reported Sale Price - $15.47M • 74,500 sf GLA • $208 per sq ft GLA • “C” Class Office Building

  38. Recent Office Transactions 812 West Broadway, Vancouver • April 2008 • Reported Sale Price - $10 M • 25,559 sf GLA • $391 per sq ft GLA • Est. cap rate range - 5.75 to 6.25% • “C” Class Office Building

  39. Recent Office Transactions QLT Building 887 Great Northern Way • Aug 2008 • Reported Sale Price - $65.5M • 160,000 sf GLA • “A” Class Office Building

  40. Overall Capitalization Rates Source: Bentall Capital Perspective on Real Estate 2008

  41. Overall Capitalization Rates – Downtown “AA”

  42. Overall Capitalization Rates – Suburban “A”

  43. Overall Capitalization Rates • Comments? • Thoughts?

  44. Summary - Assessment Methodology • Income Approach is used to value office properties • A gross potential income estimate is generated using economic absolute net rents • Vacancy and collection loss allowance deduction is based on long term trends – typically 5 to 10 years • Expense allowance deduction is for un-recovered expenses due to vacancy and structural repairs • Capitalization rates used for valuation are indicated from market transactions

  45. 2008 Assessment Roll • Comments? • Thoughts?

  46. For your office building assessment enquires, please contact: • Vancouver Sea to Sky Office: North Fraser Office: • Bruce Evans-Atkinson Dave Kingston • Lyle Dunn • Mars Koo • Capital Office: South Fraser Region: • Jill Turyk John Snow • Doug Brock www.bcassessment.ca

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