New downtown Vancouver office tower struggles to retain tenants

Comparable new buildings in the neighborhood are mostly occupied, except for some of the lower floors.

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The Vancouver Center II office tower officially opened a year ago, but it’s been a step forward and a step back in terms of filling its floors, according to local commercial real estate agents.

They say it’s surprising that GWL Realty Advisors’ 33-story AAA office building at 733 Seymour St. in downtown Vancouver isn’t taking off with tenants.

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“If you look at other new construction, it’s fair to say they’ve been more successful,” says Vancouver-based Ross Moore, managing broker at real estate firm Cresa, which advises companies on leasing.

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He hasn’t closed any deals on the building at 733 Seymour, but says comparable new buildings, such as Oxford Properties’ The Stack, a 37-story tower on Melville Street, are occupied except for some of the lower floors.

Kabam!, the Vancouver-based software company. was the first major tenant at 733 Seymour, originally leasing eight floors, from levels seven to 14, for a total of approximately 120,000 square feet.

Now, the company is attempting to sublease the top three floors, for a total of 48,000 square feet, about 40 percent of its original lease.

Vancouver Center II Building at 733 Seymour in Vancouver on February 12, 2024.
Vancouver Center II Building at 733 Seymour in Vancouver on February 12, 2024. Photo by Arlen Redekop /PNG

Sandstorm Gold Royalties, which owns royalty rights to the mining operations, leased the top four floors of the building, from levels 30 to 33, and then another space on the 27th floor.

But it recently began announcing subleases of its entire 49,000 square feet and will move into space in BentallGreenOak’s new B6 building at 1090 West Pender, where Microsoft Corp. is subleasing its space.

Peter Jenkins, senior director of leasing at GWL Realty Advisors, told Postmedia that the building at 733 Seymour is 82 percent leased, but “we have more subleases than the rest right now.”

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He said companies continue to pay GWL rent under their leases even if they choose to sublease the space. That said, he added that the company does want those spaces to be occupied by tenants.

Moore said it’s a frustrating situation for a landlord or developer when groups that have leased space in a building then turn to the sublease market.

“They are competing against you. That’s the worst part. “They are making better deals than you and you have this competition in your own building.”

Vancouver Center II Building at 733 Seymour in Vancouver on February 12, 2024.
Vancouver Center II Building at 733 Seymour in Vancouver on February 12, 2024. Photo by Arlen Redekop /PNG

On a recent weekday, there was nothing obvious about the building’s lobby or the food court traffic below to indicate the building was having difficulties with contracts. The building is located west of the Telus Garden office tower and next to Scotia Tower. An underground walkway passes under West Georgia Street and connects to the Hudson’s Bay store.

Some previous renderings of the lobby showed a modern-looking cafe space near the elevators, but that has yet to be added. Jenkins anticipates the company will be operational in the space in April or May.

Moore said new office buildings that came online between 2015 and 2017, when vacancy rates were low, were fully leased and occupied upon completion.

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“That’s not the case anymore, so I think you have to have that perspective. But I think the biggest concern is that there is so much subleased space. You have a landlord in the profit business and you have a sublessor who is on a cost minimization exercise. They are just trying to get some of their money back. It is a challenge.”

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