Proximity to rapid transit is increasingly a key factor in where new offices locate in the suburbs and Vancouver's outlying areas, according to a report by commercial real estate services firm Jones Lang LaSalle.
"The closer, the better," the company's executive vice-president Ray Ahrens said in an interview after Monday's release of the Rapid Transit Office Index. "The office buildings close to SkyTrain stations are enjoying much lower vacancies. While [it makes sense that] they [are] better occupied, we didn't know the extent of this until we did the study."
However, in Richmond, the report said the vacancy rate near Canada Line is well below half the rate of the rest of the municipality.
Ahrens said that transit is becoming increasingly popular in Metro Vancouver and "our [report] shows clear evidence that office developments located within walking distance of rapid transit have a significant advantage with less vacancy and higher rents." More people are now commuting from downtown Vancouver to the suburbs for work, he noted.
According to the report, which addressed both suburban municipalities and the city of Vancouver's outlying area, the direct vacancy rate for buildings within 0.5 kilometres of a rapid transit station is 4.8 per cent compared to 12.3 per cent for the rest of the market, while the average asking rents are approximately eight per cent higher.
The report noted that with a vacancy rate about one-third of areas not served by rapid transit, developers are increasingly looking to build more transit-oriented suburban office complexes.
"As downtown and Broadway corridor availability decreases and rents increase, our landlord and tenant clients are becoming more interested in transit-oriented suburban locations," added Ahrens.
The report cited new office developments taking advantage of the trend, including in New Westminster, where three buildings are scheduled to be ready for occupancy in 2013.
The buildings, which include the new TransLink headquarters, will more than double the area's existing 'A' class inventory and be adjacent to the New Westminster and Sapperton SkyTrain stations.
"We expect to see continued interest in these [suburban] developments, particularly from employers with back-office operations that do not need to be located downtown," Ahrens said.
The report noted that a preference for rapid-transit-oriented office space is more muted in the downtown core and Broadway corridor.
"Although these markets are serviced by rapid transit, they also benefit from their central location and convenient access to other modes of public transportation such as frequent bus service and the SeaBus. Rapid-transit access, therefore, is not deemed to be a determining factor for tenants in these two regions."
The report cited several benefits of having rapid transit near an office in the suburbs, including the ability for employees to save money on travel costs, and the ability to live in a more affordable suburban neighbourhood.
The report looked at several suburban municipalities, including Surrey, Burnaby, New Westminster and Richmond.
It concluded that the importance of having office space close to SkyTrain appears to be most pronounced in Surrey, where the vacancy rate for office space without rapid transit is 25 per cent, "yet buildings near the SkyTrain are a hot commodity, with a direct vacancy rate of just 0.4 per cent."
The index noted that Central City, with 572,778 square feet of office space, is fully occupied.
"Gross occupancy costs for buildings with access to the SkyTrain are 33.3 per cent higher than the rest of the Surrey market," the report added. "The combination of high occupancy costs and limited vacancy in buildings with rapid-transit access allows these landlords to negotiate aggressively by seeking high net rental rates and offering modest inducement packages."
For New Westminster, the report said, the direct vacancy rate of buildings along SkyTrain is less than half the rate of the rest of the city's office space.
However, the index noted that in Burnaby, there is a much lower discrepancy between vacancy rates of office buildings with SkyTrain access and those located more than half a kilometre away, although vacancies are still lower for buildings near SkyTrain.