A new report suggests the 2010 Olympic Winter Games played a pivotal role in attracting new businesses to Vancouver, and catalyzed the expansion of existing homegrown businesses. And combined, both activities greatly contributed to heightened office space demand that continues in the city today.
According to GWL Realty Advisors’ Wendy Waters, as well as data from Avison Young, an acceleration in office space demand first began prior to Vancouver’s hosting of the Olympics.
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When the Olympic bid was formally submitted to the International Olympic Committee in 2002, Vancouver was experience a staggering high office vacancy of 15% from the forestry and mining industries retracting in size, and the dot com bust of 2000 to 2001.
“Vancouver needed a transformative experience to change this trajectory,” reads the report.
The city was awarded the rights to host the Games in 2003. Annual office absorption averaged 100,000 sq. ft. of space between 2000 and 2004, and then it increased to over one million sq. ft. annually between 2005 and 2008.
“While some of this absorption boost was connected directly to hosting the Games, other growth was from companies entering or expanding in the market in response to the enhanced profile Vancouver received in these years leading up to the games,” continues the report.
These conditions were also coupled with a natural recovery from the dot com bust.
VANOC’s rapidly growing workforce also led to its occupancy of a 245,000-sq-ft, city-owned office complex in East Vancouver, which would later become the new headquarters of the Vancouver Police Department after 2010.
Growing confidence in the office market led to the 2007-completed vertical extension of the Bentall 5 office tower, adding 210,000 sq. ft. of office space by building 13 additional floors above the 2002-built 22-storey tower with 340,000 sq. ft. of office space. At the time, this was the largest new office space addition to downtown Vancouver in about a decade.
But there was also a slowdown starting late in 2008 as a result of the global financial crisis and the completion of most of the Olympic construction projects. This includes the Canada Line, Sea to Sky Highway upgrade, and the Olympic sports venues and facilities, which supported both direct and indirect jobs, such as legal, accounting, and consulting work.
There was a short post-Games lull in 2010, when some VANOC staff and their families, and others associated with the Games-organizing process, including world media, left Vancouver to prepare for the next Olympics in London.
However, since 2010, Metro Vancouver has experienced strong employment growth, outpacing Sydney, Toronto, Seattle, San Francisco, New York, and Boston.
“While some of this growth would have happened without the Games, there is a compelling case that hosting the Olympics indeed catalyzed employment expansion, attracting many new employers and allowing local companies… a bigger stage onto which they could showcase their products or services, and export them to the world,” reads the report, including Electronic Arts, Hootsuite, and the real estate sector.
Between 2010 and 2012, over 1.4 million sq. ft. of office space was absorbed — about 500,000 sq. ft. annually during this period, which is well above Vancouver’s pre-2003 average. This heightened growth occurred even with the “Olympic hangover” and lingering impact of the financial crisis.
“The Global Financial Crisis hit US firms particularly hard and resulted in many American companies’ expansion plans being postponed,” reads the report, which notes that a portion of the growth in the two years after the Games could also be considered part of the Olympic-generated growth spurt.
All things considered, it is estimated the Olympics can be attributed to the absorption of 2.4 million sq. ft. of office space from 2010 to 2015. The absorption could have been greater if it had not been for Vancouver’s low office vacancy — to the extent that it is possible that some companies interested in opening in Vancouver cancelled their plans, when they failed to find available suitable space.
Total actual absorption between 2005 and 2013 from Olympic-induced activity and market growth was 4.2 million sq. ft. — equivalent to the office floor area of roughly three Bentall Centre complexes put together.
Currently, close to five million sq. ft. of office space is in various stages of development within downtown Vancouver, with many of these projects initially proposed in the middle of the last decade when vacancy rates began to quickly drop.
“The Olympics helped solidify Vancouver’s place in the minds of many political and business leaders as a global city. When real estate investors and corporate leaders talk about the Global Gateway Cities and technology centres Vancouver is usually among them—despite being much smaller than the other locales usually on these lists (San Francisco, Seattle, New York, Sydney, London or Toronto), and having fewer major head offices,” continues the report.
“These and other cities with quality technology clusters have seen strong employment gains over the past decade, and especially the past few years… Evidence suggests the Olympics were a key catalyst in remaking Vancouver into a knowledge-economy, gateway city.”