The Conversion Of Offices Into Apartments Conversation Is Becoming More Of A Reality In Vancouver

Throughout North America and in Vancouver, downtown office buildings are increasingly empty, and the move to work from home has not helped. While turning many of these buildings into apartments may prove a challenge, the lack of housing space especially in Vancouver, is making the conversation more credible and the idea has now become very trendy.

While Vancouver’s downtown office vacancy rate of 10.8% is much lower when compared to other cities like Calgary which has a office vacancy rate of 27.1%, and the national office vacancy rate of 17%, the housing situation in Vancouver is in a much more dire condition with record low rental vacancy rates and skyrocketing property prices.

Global commercial real estate firm Avison Young estimates 548 office buildings in Vancouver could be potential candidates for conversion in what is commonly referred by the industry as “adaptive reuse” – taking an old building that was built for a specific purpose and modifying it to fulfil another purpose.

Commercial real estate buildings vary in condition, age, amenities, and other factors and are therefore classified into Class A, B and C based on these factors. Each property class indicates a different level of risk and opportunity, with Class A being the highest quality buildings in the market, typically built within the last 15 years.

Class B buildings are older than Class A buildings and do not have the same amenities and centralized locations. They generate average market rents. Class C buildings are at the lowest end of the scale, being at least 20 years old and in many cases, a state of relative disrepair.

As municipal governments look to increase the housing stock in their respective cities, they are taking a closer look at Class B and C offices as a solution. According to Avison Young’s Metro Vancouver 2023 Office report, Vancouver’s Yaletown neighborhood for instance, has more availability for Class C spaces. Currently Class A vacancy sits at 5.8% and Class C vacancy sits at 28.6%.

The adaptive reuse standard requires a building to be built before 1990 and have floor plates below 15,000 square feet. Many Vancouver buildings have floor plates between roughly 10,000 – 12,000 square feet and make them more viable from a conversion perspective.

According to a recent report published by the Canadian Urbanism Institute, a nationwide conversion of commercial real estate into housing would go a long way to provide much needed housing, improve the building standards of the converted properties, reduce the high commercial vacancy rates and lower the overall carbon footprint.

Are you selling your property? What stage of selling are you at? Are you buying a property? What stage of buying are you at. We have a full service team of appraisal, financial, accounting, legal and mortgage professionals to give you outstanding personal service. Contact us by email or call us on 604 695 1000.

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