Transformative 800 Granville proposal goes back to drawing board

August 2021 artistic rendering of the revised design for 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

Significant office uses will no longer be a major component of the 800 Granville Street redevelopment proposal in downtown Vancouver.

For years, this proposal was billed as a transformative opportunity to provide the Granville Entertainment District with a major economic engine of around-the-clock activity throughout the day and into the night, with its primary use being 468,000 sq ft of office space — featuring some of the largest office floor plates in Vancouver, suitable for large businesses and tech companies.

The 17-storey redevelopment spanning nearly the entire city block at the southeast corner of the intersection of Robson and Granville streets would have also preserved most of the heritage building facades, with the exception of the Commodore Building, which houses the Commodore Ballroom and Commodore Billiards. This is because the Commodore Building and both of its entertainment venues would be fully preserved and revitalized.

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Additionally, as a public benefit, there would be shared back-of-house and accessibility improvements for both the Commodore Ballroom and the City of Vancouver’s adjacent Orpheum Theatre, along with the gifting of a new 14,700 sq ft, 320-seat black box theatre space as an additional space for the Orpheum.

The amount of retail and restaurant space would nearly double to over 97,000 sq ft across multiple lower levels of the building.

Altogether, this new complex at 800 Granville Street would generate on-site employment for 4,000 workers in the office, retail, restaurant, and entertainment uses, with the critical mass of office workers alone generating $23 million in annual economic spinoffs for the businesses in the area.

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August 2021 artistic rendering of the revised design for 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

August 2021 artistic rendering of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

Diagram of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

But in an interview with Daily Hive Urbanized this week, Kerry Bonnis, whose family owns and operates Bonnis Properties, says the substantial office space component is no longer feasible due to office market conditions.

“Initially, the office was a big driving force with respect to our initial vision for the project, but that’s no longer the case with respect to demand. It’s just not feasible to move forward on a property that size or at any size really, unless the majority of the office property is pre-leased, but that hasn’t been the case with this. So we’ve been exploring other opportunities with different uses as well,” Bonnis told Daily Hive Urbanized.

He also blamed the current high borrowing costs for the project’s construction financing, and the continued carrying and opportunity costs of delays.

When Daily Hive Urbanized first interviewed Bonnis about his vision for 800 Granville Street in early 2021, he said his company had been holding back on doing any very long-term retail space leases on the development site to retain the ability to shift into the redevelopment opportunity.

But throughout the project’s entire timeline to date, he asserts, the challenges and delays experienced have been squarely because of the City of Vancouver’s previous planning department leadership.

He first began discussions with City staff in 2017, who took issue with the project’s non-compliant scale, heritage character implications, and building shadowing impacts on Granville Street due to its height and massing.

A non-compliant rezoning application was initially submitted in August 2021. After nearly a full year sitting in limbo, City staff in July 2022 presented the previous makeup of Vancouver City Council with a recommendation to formally put a stop to any further consideration of Bonnis’ proposal. However, at that juncture, City Council instead directed City staff to process and review the rezoning application, and produce a referral report outlining the necessary changes to City bylaws and policies for the project to be considered.

A slight revision to the rezoning application, including a more refined architectural design, was made in November 2022. In January 2023, the rezoning application was finally publicized on the City of Vancouver’s public consultation website.

The 800 Granville Street proposal also triggered the City’s Granville Street Planning Program, which is intended to be an 18-month planning process to create an area plan outlining how the Granville Entertainment District will be revitalized through new development and public space opportunities. If all goes as planned, City staff will return to City Council before the end of 2024 with a draft plan for final approval. City Council directed City staff to process the 800 Granville Street’s rezoning application concurrently with the 18-month planning process, instead of proceeding with City staff’s recommended approach of delaying any further consideration of the proposal until the area plan is complete.

“Had the City processed this application quickly, maybe we would be near construction completion today. At the time, when we first proposed it well before the pandemic, we could have leased the office space 100%, and maybe even being oversubscribed given its key location in the downtown core,” Bonnis told Daily Hive Urbanized.

This project could have been part of downtown Vancouver’s recent office building boom, which began in 2017/2018 and ended in early 2024 with the completion of the new B6 office tower. Nearly all of the projects completed in this office boom cycle — totalling about four million sq ft of premium office space — saw strong pre-leasing activity, with the strongest being Amazon’s 100% pre-lease of the entirety of the 1.1 million sq ft of office space within The Post.

In mid-2017, downtown Vancouver’s leased office vacancy rate reached 5%, making it the second tightest office market for a major city centre in Canada and the United States. By late 2019 and early 2020, downtown Vancouver’s office vacancy rate hovered at just 2%, earning it the title of the tightest office market. As of the first quarter of 2024, according to CBRE, downtown Vancouver’s office vacancy rate has contracted to 10.9%, representing an improvement from the previous post-pandemic highs — and it is still the tightest office market.

A healthy office vacancy rate range is generally considered to be between 4% and 8%. Prior to the pandemic, the most recent peaks in the office vacancy rate in downtown Vancouver were in 2015 when it hovered at just over 10% and in 2003 at about 14%.

Currently, there are zero major new office projects under construction in downtown Vancouver, as new office projects that saw their rezoning granted since 2020 have since stalled.

August 2021 artistic rendering of the revised design for 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

August 2021 artistic rendering of the office space interior of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

August 2021 artistic rendering of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

Over the past year, there has been a major changeover in the City’s planning department. City staff accused of creating obstacles for the proposal have since departed, but Bonnis paints a picture of the departmental overhaul being too late to save 800 Granville Street’s original concept.

He asserts the previous planners were not “responsive to the needs of a growing, dynamic, and diverse city like Vancouver. This project on this property would have served to really accelerate transformation and create a new vibe for the downtown core. But unfortunately, all the past people weren’t good at planning, and they were too hung up on trying to protect 10 minutes of shadows and other things instead of focusing on processing quickly and working with businesses, communities, stakeholders, and citizens to see exciting projects go forward.”

Bonnis says he is very optimistic about the new leadership team within the City’s planning department, including the selected new permanent chief urban planner, who will start the role in May 2024.

“City Council is really trying to basically redirect the ship and get the right team players and a shared vision amongst those in charge of planning staff. Hopefully, in the future, things will mover quicker because these delays kill projects. Seven years, since 2017, is a testament to how quickly things can change.”

Currently, Bonnis is working with the project’s architectural firm, Perkins&Will, to explore alternate uses for the office space volume of the 800 Granville Street proposal. He says they already have some highly preliminary concepts sketched out.

His team is hoping a revision can be made to the current rezoning application, instead of having to start from square one with a brand new rezoning application submission. It should be noted that the existing rezoning application with significant office space has not been formally withdrawn.

In July 2023, the City’s Urban Design Panel recommended some design changes for the project, specifically to the massing and the contemporary design of the new-build volume. However, the “panel applauded the proposed heritage retention strategy,” according to the meeting minutes.

The panel also expressed “general support” for the 17-storey height, and “noted that Granville Street could accommodate additional massing and density.” While “height can work with the heritage buildings,” there was a “concern that the [proposed] density does not work as well.”

Contradicting criticism made by previous City planners, the panel “however agree with the applicant of the overwhelming benefits of bringing more people to the street and area outweigh shadow on the street.”

August 2021 artistic rendering of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

As for what could be the project’s new primary use to replace the office volume, Bonnis suggested the ideas of an apartment hotel for extended-stay hotel uses and/or traditional secured purpose-built rental housing, which would “certainly make the project more viable.” Such alternative uses would still be on top of significant retail, restaurant, and entertainment spaces.

He went on to further suggest that the City’s Granville Street Planning Program should consider allowing some rental housing on top of the entertainment district’s commercial uses. Previously, at the outset of the area plan’s planning process, City staff suggested the direction of gradually transitioning out any remaining residential uses in the area in favour of commercial uses that are compatible and complementary with the entertainment district’s activities, with City Council particularly directing City staff to encourage traditional short-term stay tourist hotels on the Granville Strip. Office uses in the upper levels of the entertainment district’s buildings were also seen as a strategy to encourage productive daytime foot traffic for the area.

“The reality is, right now, as it is, it’ll be awhile before the office market comes back,” said Bonnis, before asserting the need to enable alternative uses to prevent further “stagnation” on the Granville Strip.

When Daily Hive Urbanized asked Bonnis whether the office volume of 800 Granville Street could be replaced with a very large traditional short-term stay tourist hotel volume, he did not dismiss the idea outright, but said a major partner with both the financial resources and proven hotel operations experience would be needed, suggesting that such uses are not his company’s forte.

“I’m a big supporter of the growth of new hotels… If there was a group interested, absolutely. The difficulty with hotels is if a property owner doesn’t have experience with owning and operating a hotel, and they’re very difficult to find financing. The only way it could actually be done is if somebody were interested to commit their own financing to building a hotel. If an opportunity arose, we will definitely take a look at that because 800 Granville would be a fantastic site for a hotel,” Bonnis told Daily Hive Urbanized.

“But to build one on spec without the experience and without a hotel partner, it’d be an understatement to say it’d be challenging.”

According to local tourism bureau Destination Vancouver’s forecast, as of early 2023, a total of 20,000 new additional hotel rooms will be needed across Metro Vancouver over the coming decades, including 10,000 within Vancouver and another 10,000 elsewhere in the region outside of Vancouver. Without the new hotel room supply, the tourism industry — one of the region’s few strong economic and job-supporting strengths — will suffer and become less competitive, including the inability to land conventions, meetings, concerts, and events. This would also impact Vancouver’s major film and television production industry, which depends on overnight accommodations for its various talent and staffing needs. Hotel rates would also continue to skyrocket, which would deter visitation — limiting the type of visitors the region sees.

The hotel room shortage would begin seasonally in Summer 2026 within Vancouver, and quickly grow into other periods of the year and other areas of the region over subsequent years.

And this forecast by Destination Vancouver was made long before the provincial government’s new regulations that effectively curb short-term rentals starting in May 2024. While the new regulations have improved long-term rental supply for people who live, work, and study in the region, it has placed even greater demand on the region’s already highly constrained traditional hotel room supply.

Currently, there is just one publicly known hotel proposal on the Granville Strip — a rezoning application for a 33-storey hotel tower at 717 Davie Street (the Cold Tea Restaurant site) at the northwest corner of the intersection of Granville and Davie streets. The 464-room hotel also includes a tower rooftop lounge, bar, swimming pool, and patio.

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Artistic rendering of 800 Granville Street, Vancouver. (Perkins&Will/Bonnis Properties)

Although the replacement use for the 800 Granville Street proposal’s office volume has yet to be determined, Bonnis remains very confident with the project’s other commercial component — the retail and restaurant uses.

“We have quite a lot of leasing activity on the street,” he said.

Bonnis also believes Cadillac Fairview’s new yet-to-be-announced secured tenants to fill the former Nordstrom void — 230,000 sq ft of prime retail space over three levels — at CF Pacific Centre shopping mall, just kitty corner from the 800 Granville Street site, will create a new strong critical mass of shopping attractions in the area.

“I’ve heard there’s going to be not just one tenant replacing the vacancy of Nordstrom, and apparently there will be a few tenants — exciting ones. That will certainly serve as a catalyst to help see some new growth and excitement for the core.”

Daily Hive Urbanized recently reached out to Cadillac Fairview for more information on the future tenants of the former Nordstrom space. The mall owner indicated they do not have any updates to share at this time.

The biggest near-term change coming to the Granville Strip will be Cineplex’s The Rec Room, located just across from 800 Granville Street. The 45,000 sq ft entertainment centre is expected to open later in 2024.

For decades, Bonnis Properties has been synonymous with Granville Street within downtown Vancouver, given the number of large and highly prominent assets they hold in the area. However, recently, they have been looking to dispose a number of these properties, which are mainly commercial-only use assets, in order to free up capital to expand their multi-family residential portfolio elsewhere in the city.

This includes listing 798 Granville Street, one of his family’s flagship properties, located at the northeast corner of Robson and Granville streets — immediately north of the 800 Granville Street site. It is best known for its anchor tenants of Best Buy and Winners and pair of Times Square-style giant digital advertising screens.

“We have some multi-family sites that we’d like to work on. The most active market right now is certainly multi-family residential, given the shortage of housing that we have. So we’re selling some of our long-term assets to free up working capital to move forward on another project. Some of these projects will be mixed-use residential and commercial,” added Bonnis.

Site of 800 Granville Street, Vancouver. (Kenneth Chan/Daily Hive)

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