Reviving Downtown Victoria - The Office Space Conundrum
I guess I couldn’t have picked a better time to publish my second article on Reviving Downtown Victoria. I was already in the midst of drafting this when the news of Maximus reducing their office footprint downtown came out. If you read my first article in this three part series, you would know I am being facetious. The loss of 500 people from downtown is significant. I don’t know what percentage of those maximus employees were still working in the office, as none of the stories I read on it indicated that. Still, it is a large number of people who could have been potentially going to shops and restaurants on their lunches and no matter how small the actual impact is, those places nearby will notice. Something else the articles I read didn’t discuss is what will happen to the building. That is what this article is all about.
It is clear to me, despite the fact that that the office vacancy in Victoria remains low right now, that it will not remain that way. What is not evident in 6.8% vacancy rate is what percentage of that space is currently being actually used. 93.2% is the percentage of current space that is leased. Right now, across the city, both corporate and government agencies are looking at their current footprint and comparing that to their actual needs. I know that office buildings are sitting at pretty high vacancy rate when it comes to actual daily used space by workers. This truth can be seen in the lower commuter rates between now and pre-pandemic. So at some point organisations are going to reduce their current leased footprint and my expectation is that it will be significant. At the same time, with Telus Ocean; the recently completed offices along Pandora; and the proposed offices at the Capital 6 site; there is going to be a lot of premium Class A office up for grabs. That means that the Class B and C office buildings in Victoria are going to see a significant rise in their vacancy rates. It is highly likely that this will result in buildings being empty. This is a significant problem for Downtown Victoria, but also an opportunity.
It is significantly easier to repurpose a built building and put back into use than it is to build whole new building. So what can we do with them? For me, there are really three main options, though in certain specific circumstances, there may be multiple uses for a single building. For a Victoria example of unique reuse, the Victoria Press Building deserves a lot of attention, more than it has gotten to date in my opinion. The three essential ones are: residential conversion, commercial conversion, and my favourite, shared light industrial (maker spaces). We will look at each one and the benefits and challenges, especially in the Victoria market.
Residential Conversion
This is defintiely the darling of the discussion around office reuse. I mean across North America we have significant housing shortages and with office buildings going empty, turning them into homes seems like the obvious thing to do. Unfortunately, there are two big problems with it, first it is not that easy to do (thanks to Sidewalking reader Rachel for sending this article along!) and second, we should pause and ask if it is the right thing to do with the spaces.
As that very illustrative article from the New York Times shows, you can’t just turn any office building into an apartment building by throwing up some interior walls. A great local example is the Hudson Building on Douglas Street. Faced with massive floorplates, the developer had to carve out a significant courtyard space so that some of the apartments could face inward and have windows to outside. Buildings like the old CIBC building on Douglas across from the Mall would have similar issues, as would the post office building in the Maximus example, though to a lesser degree. That doesn’t mean it can’t happen, but we can’t look at these buildings as a simple fix to a housing crisis, despite all of the hype around them. We do have a couple of examples of office conversion in Victoria that have worked including the MEC building on Government and the old Ministry of Finance building around the corner on Pandora Avenue. So conversions can be done, but should they be done?
I recently spoke about the difference between a residential building and an office building when it comes to the sheer volume of people they can hold in my article on Harris Green Village. An office building holds a significantly greater amount of people than a residential building of the same size. This means that when all of those people head out onto the street, their impact is much greater when it comes to patronizing local stores and restaurants. This doesn’t mean you want to have just one or the other. You want a mix because of the significant time-shift benefits of both types of buildings over the course of a day. I just point this out for those that think that simply shifting the lost downtown office workers to downtown residents that work from home is a matter of changing their addresses, it doesn’t work that way. We would need 3 to 5 residential buildings to make up for a comparably sized office building. The basic math is that if we converted all of the office buildings in Victoria to residential tomorrow and they were all populated by work at home folks, we would see a decline in the working population during the day of more than half. Still as I have said, some buildings make sense for conversion and I look forward to seeing some of the plans that will undoubtedly come forward in the next few years. One residential building option that I like, but would be hard to implement under the current residential tenancy rules would be to have office buildings converted into true large scale artist studios for real artists. As it is, the financial math and the equity rental rules would make this challenging, yet it would be a great thing to see. There are other options for these office buildings though.
Commercial Conversion
Another option for old office buildings is creating new and interesting shopping experiences. While the traditional malls are having mixed success across Victoria; office buildings provide an alternative shopping space that could be a more budget option over leasing mall space, especially at above street level areas. I have noticed quite a few of these type of set-ups on the second floors of buildings in Vancouver and they usually have a very interesting assortment of clothing stores, food courts or grocery stores.
This type of transition would likely only work in some buildings and not in an entire large office building, as people are not going to want to ride up elevators to get to shops, but it could be a partial solution to a building facing lower occupancy. One of the benefits to this type of conversion is that it would be dramatically easier to do over a residential conversion as the walls being put up could be more temporary and you wouldn’t need to plumb every space like you would with apartments. I know that some would say that given our current commercial vacancy rates, this type of space would not get filled up. I would say that there are likely lots of people out there that would love to have a storefront for their business and can’t currently afford the on-street or traditional mall leases. An office conversion to commercial could result in spaces that are significantly cheaper to lease. You could even see the potential for a more traditional market space where people are just leasing table space. That could result in an even cheaper conversion as you wouldn’t really need walls at all. It would have to make economic sense, but a full floor leased out as a market to several vendors would provide more income than a vacant office floor. I would love to see this tried and we will have that opportunity as more office space starts to sit vacant.
Shared Light Industrial
My last option is something that I personally find exciting and that I wrote about as a possibility for some of the vacant commercial space in the city a couple of years ago here. Maker spaces or small production facilities for startups is something we could definitely use. If you go to a weekend market or just look on the local Facebook marketplace, it is clear that there are a lot of people making a variety of things at home. I think that both those Victorians that are already making products and those that have an idea to make one, but are limited by where they live, could benefit from easily accessible maker spaces. We already have a large scale one in Saanich at the Victoria Tech Park, the Victoria Makerspace. The Victoria Makerspace has tools that can used for metal work, woodwork and electronics manufacturing. Unfortunately, it is not conveniently located for most people. Having one (or many) downtown would be a great opportunity for all of those people living nearby and could be the start of a viable business. The great thing about having it in old office buildings is that it could work in a similar way to a co-working office like Kwench. This would allow it to be scalable for startups that may need to expand in place before getting their own space.
The one limitation on this currently would be zoning. Most of the downtown office buildings are zoned either Central Business District 1 or 2. You can read the truly fascinating current applicable zoning bylaw here (This document is definitely on the list for a blog post of its own). Unfortunately, outside of having a farm in the building, most types of maker spaces would not be permitted, at least by my read of the bylaw, though if you see something I missed please leave a comment. That means that there will have to be either amendments on a case by case basis or an amendment to the whole bylaw to change permitted uses in CBD-1 and CBD-2. I know the worry would be in having loud light industrial right downtown but I think that this would be minor issue if we are talking a wood working studio or some sort of CNC machine. Larger scale light industrial could still be kept quite separate in the areas it currently sits.
There are lots of other opportunities for downtown office space use apart from residential, such as educational uses; fitness and spa studios and similar types of places; urban agriculture; and galleries and other cultural uses. I think that the way we get the best benefit out the reuse of office spaces is thinking about what will provide the most employment per square foot as this will come as close as we can in replacing the loss of office workers downtown.
If you have a great idea for how we should be repurposing our downtown office buildings, I would love to hear it. Leave your suggestion in the comments below!