Colliers

  • Tessa Bousfield posted an article
    “Tech has now arrived, it’s proud and showing off a bit more.” see more

    Source: Capital Magazine
    Author: Andrew
    Duffy

    Victoria’s tech industry breathes life into downtown

    Victoria’s downtown core, which has been much maligned over the years as a dead zone where retail went to die, is very much alive and thriving these days — and it owes a portion of its renaissance to the region’s soaring technology sector.

    The high-tech sector, which boasts annual revenues in excess of $4 billion and is considered the city’s most valuable industry, has found a solid fit in the city’s downtown, filling in upper-floor and hard-to-rent offices. And the city seems to have responded in kind, flourishing with new retail offerings, cafes, pubs, restaurants, services and a host of new residential buildings.

    While no one in the tech sector is about to claim full responsibility for the life breathed into the downtown, it’s hard to avoid linking the fortunes of the two.

    “Tech has been a huge economic boon to downtown,” said Marc Foucher of Colliers International Victoria. “There are 380 tech firms operating in downtown Victoria alone and they are employing people who walk out for coffee every morning, eat lunch downtown, shop after work, go to yoga.

    “I’m not at all surprised that retail is coming back downtown. There are more shops, more vacant retail fronts are being leased up and following on that are the number of condos and rental buildings going up in Victoria. Tech is not responsible for all of it, but it plays a role.”

    According to Colliers’ most recent retail market overview, tech, tourism and increased downtown residential building have resulted in the retail vacancy rate dropping to 5.45 per cent at the end of last year compared to 8.53 per cent at the end of 2015.

    And Colliers’ last office-tenant demand profile study in 2015 showed that of all lease deals done in the region, tech and digital media accounted for 49 per cent, with government deals accounting for just 23 per cent.

    In the downtown core, tech accounted for 90,000 square feet of space leased in 2015 while government leasing accounted for 111,000 square feet.

    Dan Gunn, chief executive of the Victoria Innovation, Advanced Technology and Entrepreneurship Council, known as VIATEC, said tech companies have been downtown a long time, but they are just now starting to make their presence felt by the sheer weight of their numbers.

    “The difference is the success they are having now and the size they are now,” said Gunn, noting there were more than 300 firms in the core five years ago. “Tech has now arrived, it’s proud and showing off a bit more.”

    He believes the establishment of VIATEC at the highly visible Fort Tectoria (777 Fort St.) and shared-space tech buildings such as The Summit (838 Fort St.), 844 Courtenay St., 955 View St. and SpaceStation (517 Fort St.) have provided natural hubs where tech workers can get together and experience a sense of community.

    “We wanted a retail street-level presence so people could identify and see the evidence of the tech sector,” said Gunn of VIATEC’s return to the downtown core in 2014. “Until then, tech had been largely invisible.”

    There’s no missing them now, and Gunn said that will continue as young companies who want to succeed have learned they need to be in desirable locations, close to amenities and on transit routes to attract and retain talent.

    “Having a good place to go for lunch or a beer, the amenities for day-to-day life are key considerations,” he said. “Downtown cores are appealing to tech companies and staff because of all they have to offer.”

    Tobyn Sowden, chief executive at software developer Redbrick, said they have always been a downtown company, starting in Market Square and now occupying a large open-floor space on a second floor on Store Street.

    “We were attracted to this building because we knew we could really customize it to meet our needs, and we worked with some amazing local designers and contractors to do just that,” said Sowden. “We are adamant about helping to promote a great work-life balance, and with so many of our team members walking, cycling and sometimes even running to work, being centrally located downtown is extremely important to us.”

    Sowden said the company feeds off the new energy downtown and the downtown seems to be doing the same in reaction to the influx of tech companies.

    “The amenities around us have multiplied and expanded since we opened up shop in 2011, and though we have a weakness for the amazing coffee shops and pubs nearby, we can't take full credit for their growth,” he said. “That said, I don’t think we can live without them; at the very least, our productivity would suffer without all of the coffee and lunch options at our doorstep.”

    Catherine Holt, chief executive of the Greater Victoria Chamber, said the tech sector has played a big role in creating the new vibe downtown. However, she is quick to point out it’s not the only factor.

    “Visitors and new downtown residents is what is re-invigorating downtown and absolutely the tech sector is a big part of that,” she said, noting the tech sector may not sell a lot of product or service here, but its workers do spend a lot of money in the city.

  • Tessa Bousfield posted an article
    While our tech boom is no longer a phenomenon, the sector keeps growing... see more

    Source: Remi Network
    Author: Rebecca Melnyk

    As government moves to new Class A assets, tech companies snap up vacated, older stock

    In an old two-storey brick building, once old home to the Victoria Stock Exchange, a start-up has moved into its new office digs. Previously situated in Langford, B.C., educational technology company RaceRocks 3D relocated to the Exchange Building in downtown Victoria to be closer to clients, save money on space and live in the rhythm of a prosperous tech haven.

    “We’re right downtown with a lot of other creative people; there’s a lot of talent,” says Scott Dewis, chief executive officer of RaceRocks 3D. “We see the founders and staff of other companies at lunch walking around the street. It’s a vibrant place for an entrepreneur.”

    After scouting 16 other local office spaces with Colliers International, the company found its home, knocked down the walls and created an open-floor plan with a kitchen. Now they have long-term plans to stay put in the area.

    Startups like RaceRocks 3D Inc. are a common feature in Western Canada’s second oldest city.  While the tech boom there is no longer a phenomenon, the sector keeps growing and is now part of a $4 billion a year industry. Dave Ganong, managing director at Colliers International (Vancouver Island), remembers back to 2000 when American company JDS Uniphase acquired Victoria-based optical-component supplier SDL Inc. for $41 billion in what was one of the biggest tech mergers in corporate history.

    “The foundation of the tech industry has been there for 20 to 25 years or more,” he says. “But what’s happening is it’s becoming this incubator hub that is not just trendy, but sustainable.”

    Victoria has a long history as a lively business centre, with miners and adventurers flocking there during the gold rush of 1858. Once a calm village, Victoria evolved to become a city where lots were said to go from $25 a piece to $3,000 each, immediately following the influx of gold-seekers. Eventually, government and tourism generated the greatest economic impact for the region.

    Until the tech sector started creating a buzz. Now, more and more buildings fill with start-ups and early stage entrepreneurs every year. About 900 tech companies populate the city, employing a workforce of about 20,000 and growing. Local conferences accelerate the global reputation of Victoria and attract investors. Demand for new office space among the industry has now outpaced government in the downtown core, specifically in brick-and-beam buildings which tend to be Class B and C assets.

    “There’s a building boom in the office sector in the downtown core where we’re doubling the size of our Class A inventory in the next 18 to 24 months,” notes Ganong. “That’s half a million square feet of space coming on—a massive increase. 75 per cent of that space has been preleased to the government or private sector, but what happens from this is we’re seeing a lot of vacancies coming up in Class B and C space where the majority of demand comes from the tech sector.”

    Ganong has seen an exponential increase in leasing to the tech sector over the past three years, moving from 100,000 square feet to an estimated 300,000 to 350,000 square feet in 2016. This doesn’t take into account other competitors.

    Developers and investors are also buying more on spec (some with tech companies in tow), looking to create flex office space where desks and common facilities can be rented.

    Dan Gunn, chief executive officer at The Victoria Innovation, Advanced Technology and Entrepreneurship Council (VIATEC), a not-for-profit incubator accelerator, says his program’s success has resulted in a move to the downtown core, into a 100-year-old, 16,000 square foot building on Fort Street.

    “We have 18 private offices of varying size and another 24 open desks that companies can rent at an affordable price,” he says.  “We opened the building in September 2014 not knowing what to expect. The building was full in a matter of months.”

    To accommodate demand and sector-specific needs, large buildings are being gutted for purpose-built use. For instance, the 20,000 square-foot Summit Building on Fort Street once stood completely vacant, but was fully revamped and open to tenants in September 2015. Several companies wishing to share a building can do so and expand as required.

    Besides the flexibility and character of these older buildings, companies are also putting roots down due for lifestyle offerings.

    “More and more companies trickling in from the rest of Canada are quite often going there through an acquisition or because one person leading a development team wishes to move their family to Victoria,” says Marc Foucher who brokered the RaceRocks 3D deal.

    The proximity to qualified students graduating from local colleges and universities is also key. Change.org, the world’s largest online petition platform, is in the midst of renovations in its new office on the second floor of 1221 Broad Street and plans to recruit local talent. After the company wanted to expand its engineering team, it realized more room was needed. The landlord offered them a temporary space while they await finishing touches.

    “Once we move downstairs, we’ll have plenty of room for growth and more meeting rooms,” says Chris Campbell, principal engineer at the Victoria location.

    Campbell says the company, headquartered in San Francisco, figured that expanding its engineering office in Victoria was more affordable in terms of cost of living and office space. But it is also relatively easy to find suitable employees in the area.

    The city no longer relies on tourism’s “shoulder season,” as Gunn calls it, between May to September, but a year-round tech economy that supports a large number of retail assets like the 11 craft breweries, independent coffee shops and North America’s second-highest number of restaurants per capita, behind San Francisco.

    “Retail leasing agents who used to find it a challenge in the downtown core are starting to see some activity that is almost on par with the increases we’ve seen in the tech sector office leasing market,” says Ganong, adding that another factor here is tourism—an industry that could experience its best season ever this year.

    In less than a year, Ganong says his company has seen storefront vacancy drop a full percentage point from where it peaked north of 10 per cent. The city has also been supportive in granting bonus density to start populating higher density residential development in the downtown core, which helps populate more retail activity.

    “There is some sort of convergence here that is happening,” he says. “I’ve lived in Victoria for 33 years and some of my colleagues have lived here all their lives. They are even starting to feel something here they’ve never felt before.”