Just three years after Microsoft set up shop in Richmond, the software giant is leaving.

Microsoft Canada Development Centre is relocating from Richmond to Vancouver, the News has learned.

The move will add to Richmond's growing vacancy rate for the office market, pushing it to a whopping 26 per cent, according to a recent report by CB Richard Ellis.

Linda Reid, MLA for Richmond East, was surprised to hear of the relocation, but said it's not surprising given the contraction that occurred in the recent recession.

"Everybody is experiencing huge shell shock, economically," she said.

A company spokesperson could not be reached for comment by press time. However, in an e-mailed response, the company's PR firm -- High Road Communications -- said: "Microsoft is relocating its MCDC employees to its offices in downtown Vancouver, in an effort to consolidate its various offices in the Greater Vancouver Area. Our investments in British Columbia continue to grow."

In an exit interview with the city's economic development officer, the company said the relocation was simply a downsizing exercise.

"Our city staff was told that this was nothing to do with being unhappy with Richmond," said Mayor Malcolm Brodie. "It was simply a matter that they were downsizing their operations significantly."

The company employs workers from all over the world. After it opened its Canada Development Centre in 2007, managing director Parminder Singh told the News that some employees were finding it tough to find a place to rent in Richmond, so many ended up renting in Vancouver. That posed a problem for some workers in getting to and from work in East Richmond at the Crestwood Corporate Centre off of No. 6 Road.

And because some workers had learners' licences, they weren't allowed to drive at night.

Neonila Lilova, the city's economic development manager, said if transportation and the lack of rental housing were issues, Microsoft didn't mention it in its June exit interview.

"They did not indicate any of these reasons," she said.

High Road also said transportation and housing were not determining factors in the relocation.

As for vacancy rates in the office market, Lilova said there are higher vacancy rates "across the board" in Metro Vancouver region -- a result of the general economic downturn that started in 2008.

However, of seven metro regions recently surveyed by CB Richard Ellis, Richmond leads the pack when it comes to high office vacancy rates, and the loss of Microsoft makes it worse, according to the report.

Downtown Vancouver has the lowest vacancy rate: 5.6 per cent. Richmond's stood at 22.6 per cent for the second quarter of 2010, which was a slight improvement over the previous quarter (23.2 per cent). Burnaby is next with 18.9 per cent. Surrey's office vacancy rate is 15.8 per cent; New Westminster's is 13.8 per cent.

The loss of Microsoft to Vancouver constitutes a fairly significant shift, according to the CB Richard Ellis Market View report.

"This (relocation) is in addition to the 55,000 SF of vacant space they still have available for sublease (in the Crestwood Corporate Centre)," the report says. "The amount of space coming back to the market will be a significant setback for the Richmond market when one considers that the 10-year annual average absorption rate is approximately 46,000 SF. These three spaces will push Richmond's vacancy rate to over 26 per cent."

One source told the News that the Microsoft's move had a lot to do with Richmond's lack of rental accommodations. However, rental vacancy rates here have actually improved slightly -- moving from just 0.5 per cent in 2007 to 2.7 per cent in 2009, according to Canada Mortgage and Housing Corporation stats for October 2009.

Another source complained of poor transportation. While the Canada Line is a boon, there is a lack of buses to and from the line.