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Canada’s commercial real estate markets were undoubtedly tested through the COVID-19 pandemic. While some Canadian cities, like Calgary, struggled to keep rising office vacancy rates at bay, many Vancouver submarkets remained relatively unscathed and, in some cases, experienced an uptick in interest and activity. Namely, Vancouver’s Mount Pleasant submarket, which proved resilient during these challenging economic conditions as it out-performed downtown Vancouver, a consistent holder of North America’s lowest office vacancy rates. Situated North of E 16th Avenue to Terminal Avenue and spanning Southeast from Cambie Street to Clark Drive, Mount Pleasant has quickly become Vancouver’s top live-work neighbourhood. It is now home to countless budding and thriving tech, healthcare, and lifestyle companies, such as Abcellera, Hootsuite, and Saje Wellness. The area has welcomed a new Emily Carr University of Art + Design campus, Canada’s leading arts university, and the new $2.1 billion St. Paul’s Hospital started development this year. On pace to be a top workplace destination for B.C., many past and present factors contribute to Mount Pleasant’s ascension.
History of Mount Pleasant
In the 1980s Mount Pleasant was occupied by industrial users such as repair shops, wholesalers, and manufacturers. When development of Olympic Village began in the early 2000s, a real estate boom occurred. New “white collar” businesses started looking for modern and affordable spaces, such as tech and animation companies. In 2013, several strata and large-scale commercial developments emerged when the City of Vancouver (COV) rezoned most of the submarket to I-1 (Light Industrial) to increase permitted office and commercial use. In 2014, the COV approved the Broadway Subway Project, a 5.7-kilometre rapid transit system extending the Millennium Line, which will connect Mount Pleasant to all parts of Metro Vancouver by 2025.
Tightest office market
At first glance, Vancouver’s tightest office submarket appears to be downtown Vancouver; however, after diving deeper into statistical data, it can be argued that this title belongs to Mount Pleasant.
In CBRE’s most recent quarterly report, we compared office and industrial stats in markets across Canada and found downtown Vancouver experienced the lowest office vacancy in North America at 6.6 per cent, while Metro Vancouver industrial availability was the second-lowest at 1.1 per cent.
Mount Pleasant has approximately 20 times less total office inventory, equalling 1.46 million square feet, than Vancouver’s Central Business District (CBD) downtown, which has 21 million square feet. However, when we analyzed the office vacancy rates for the two submarkets over the last year and a half, the data told a more compelling story. Leading up to the pandemic, downtown Vancouver’s CBD in the first quarter of 2020 witnessed an all-time low in office vacancy rates. When the pandemic started, office vacancy rates in Mount Pleasant and the CBD were neck-to-neck. Thus, although the vacancy rates appeared similar, far less office space was available in Mount Pleasant. Electronic Art’s recent lease of 1077 Great Northern Way, a 119,844 square-foot building, showcases the area’s resilience. As of mid-2021, Mount Pleasant’s vacancy rate had dropped significantly to 5.4 per cent while the CBD remained at 6.6 per cent.
Best Buy recently announced their plan to relocate their headquarters from South Burnaby to 425 West 6th Avenue, a development by Cressey Development Group, in Mount Pleasant, the most significant shell office deal in 2021 to date. In addition, biotech firm AbCellera announced their plan to build a biotech campus – its “global headquarters” – at 110-150 West 4th Avenue, taking up an entire city block.
Future of Mount Pleasant
The upcoming Broadway Subway Project and pending Broadway Plan has caused a significant spike in interest and activity in the neighbourhood. Numerous commercial developments are underway, with more in the pipeline. Classified by I-1 zoning with a 3.0 FSR, many of the developments in this submarket will mirror a similar building structure; the ground floor will provide light industrial, featuring a retail component or storefront with manufacturing and production facilities, with three stories of office space above.
Mount Pleasant provides commercial real estate opportunities for a variety of keen real estate investors. Low-interest rates teamed with rising real estate prices have spurred development speculation with upcoming projects like Ofiswerks at 234 W 3rd Ave, signalling developer relocation and new entry into the submarket. Formwerks, the builder of this project, has made preliminary plans to build and occupy a portion of the space and sell the additional square footage to smaller investors such as local business owners, entrepreneurs, and doctors.
Other large-scale developers and corporations have also taken an interest in this submarket. PCI Developments and HOOPP recently acquired a 1.66-acre site at 5 West 4th Avenue in Mount Pleasant. Lululemon also has a purpose-built headquarters planned at 1980 Foley Street, a 2.8-acre site along Great Northern Way.
Mount Pleasant now appears on pace to become Vancouver’s top workplace destination.
- Ed Ferreira is senior vice-president of the industrial properties team at CBRE in Vancouver.
