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Report reveals higher rents around transit stations
Vancouver, November 11, 2014 – Rapid transit proximity remains a key driver in the Metro Vancouver suburban office market. Office buildings located within 500 meters of rapid transit stations generally benefit from lower vacancy rates and higher rents than those areas not served directly by rapid transit. The fifth Metro Vancouver Rapid Transit Office Index released today by JLL (NYSE: JLL), quantifies the advantage of rapid transit-oriented developments and supports the trend of office tenants gravitating towards buildings directly serviced by rapid transit. Excluding two recently completed speculative office developments, direct vacancy for buildings within 500 meters of a rapid transit station is less than half that of office buildings not directly serviced by rapid transit.
JLL's Rapid Transit Office Index is the result of an in-depth study on trends in Metro Vancouver suburban vacancy rates, absorption trends and occupancy costs for office space outside of the Downtown Core that is located within 500 meters of a SkyTrain station.
"Rapid transit proximity remains one of the most significant considerations for office tenants when evaluating real estate requirements throughout Metro Vancouver," said Scott MacDonald of JLL Vancouver's Office Leasing team. "Our Rapid Transit Office Index shows that buildings within walking distance of rapid transit stations enjoy lower vacancy while achieving significantly higher rental rates. The correlation between rapid transit proximity and office leasing trends is further supported by the fact that more than 90 percent of office space in the development pipeline is located within 500 meters of a rapid transit station. This supports the fact that developers have been placing an increased focus on transit-oriented redevelopment sites within their portfolios."
With traffic congestion identified as a significant obstacle in Metro Vancouver, rapid transit enables tenants to minimize commuting time and costs. Further benefits include reduced impact on the environment, higher employee retention, and the ability for tenants to attract top talent. Transit-oriented development has become – and will continue to be – a global driver of new office and mixed-use developments.
"The benefits of transit-oriented office space are not limited to occupiers. Owners and developers are able to capitalize on these prime locations," said Mark Chambers, Executive Vice President of the JLL Vancouver's Office Leasing team. "Tenants will pay a premium for direct access to the SkyTrain and owners of rapid transit-oriented office buildings are subsequently able to benefit from higher rents and lower vacancy rates. In Richmond, for example, buildings within 500 meters of a Canada Line Station are 4.6 percent vacant while buildings slightly outside of walking distance, within 500-1000 meters from the nearest station, currently have more than five times as much vacancy at 27.5 percent."
JLL's study analyses key data in rapid transit serviced submarkets throughout Metro Vancouver including Burnaby, Richmond, New Westminster, Surrey and Vancouver (outside of Downtown). The preference for office space within 500 meters of a rapid transit station outlined is clearly evident in the vacancy and/or occupancy cost differentials of most submarkets. Vacancy in Burnaby and New Westminster have been greatly impacted by large speculative transit-oriented developments that were recently completed without substantial pre-lease commitments. While the delivery of these developments resulted in an increase in transit-oriented vacancy, absorption within 500 meters of rapid transit stations over the last 12 months was 522,369 square feet compared the 2.5 percent vacancy increase and comparatively minimal new construction in those areas not serviced directly by rapid transit, indicating that tenant demand for office space near rapid transit stations has not diminished.
JLL is Canada's fastest growing commercial real estate firm. JLL has two offices in Toronto, with the headquarters located downtown. The firm also operates in, Mississauga, Montreal, Ottawa, Vancouver, Calgary and Edmonton. JLL manages over 50 million square feet of facilities across Canada. The firm offers tenant and landlord representation, project and development services, investment sales, advisory and appraisal services, debt capital markets, and integrated facilities management services to owners and tenants in Canada.
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $53.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
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