Tenant incentives rise in downtown Vancouver office market | Daily Hive

Office buildings in downtown Vancouver. (Urban Napflin/Shutterstock)

Leased vacancy rates for top-tier office buildings in downtown Vancouver dipped slightly in 2025, keeping the primary city centre for Canada’s third largest metropolitan regions as one of the tightest office markets in North America.

Even so, asking rents across most types of commercial properties declined over the year, as both landlords and tenants remained cautious.

According to a new market report today by Royal LePage, the broader Metro Vancouver suburban office market has held up better than the downtown Vancouver peninsula.

Leased office space vacancy rates remain low compared to many other major city centres in Canada and the United States, but conditions in downtown Vancouver currently favour tenants.

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Large office towers have been hit hardest, as many companies continue to embrace semi-remote work and look for ways to use less space more efficiently.

To stay competitive, landlords are offering perks such as lower rents, rent-free periods, and more flexible lease terms.

Meanwhile, construction of new office buildings has slowed significantly, following the conclusion of an office building boom that first began before the pandemic. There are no office towers under construction at the moment, with the previous boom ending with the 2023 completions of Bosa Waterfront Centre office tower (which has a significant strata ownership office space component) and The Stack office tower — Vancouver’s tallest office building, and one of the largest in terms of floor area — and the 2024 completion of B6 office tower.

Earlier completions of roughly five million square feet of new modern premium office space with a high degree of amenities also led to a “flight to quality,” with older, lower-tier office spaces seeing higher vacancy rates due to interest in new, higher-tier properties.

The Post, Vancouver’s largest single office building, was completed in 2023. All 1.1 million sq. ft. of office space was fully pre-leased by Amazon, with employees first moving into the building in September 2023 and gradually expanding within the complex as additional interior space was completed.

Later in 2026, Amazon is expected to begin occupying The Post’s North Tower, having already taken up space in the South Tower and the centre block levels. Sony Pictures Imageworks’ global headquarters has also moved into the base podium of The Post, converting a significant space originally slated for retail.

Lululemon has also leased 300,000 sq. ft. of premium office space directly above the former Nordstrom department store in the CF Pacific Centre mall building, a space that was previously occupied by Microsoft and Sony Pictures Imageworks.

“Vancouver’s downtown office rental market has remained soft in the post-pandemic period, with the greatest pressure on larger office buildings as companies reduce their footprints and continue using hybrid working models,” said Raman Bayanzadeh, principal of CRE investment and development team at Royal LePage Sussex, in a statement.

“As a result, downtown landlords are increasingly offering incentives, such as discounted rental rates and extended rent-free periods to attract tenants. In contrast, office markets outside the city core have seen more stable growth in rental rates.”

Some developers are adjusting their projects — shifting more space toward residential uses and new hotels and reducing planned office space — to better reflect today’s demand.

There is one big exception to this trend — Cadillac Fairview is bringing back its Waterfront Station office tower proposal, bringing over 400,000 sq. ft. of premium office space next to the public transit hub to meet medium-term demand for such space.

“Due to ongoing office market softness over the past two years, new supply has continued at very modest levels through 2025,” continued Bayanzadeh.

While property owners are facing ongoing challenges, businesses looking for space may find this an attractive moment to negotiate.

This cautious approach has slowed leasing activity, especially among larger companies, as they balance long-term space decisions with economic uncertainty and evolving workplace expectations.

“The silver lining is that current market conditions present a compelling opportunity for office tenants to secure high-quality space in desirable buildings,” said Bayanzadeh.

“Many tenants are being selective and taking a measured approach, with more price-sensitive users waiting for clearer signals that the market has reached its bottom before committing.”

The leased industrial space market — such as warehouses and distribution centres — has also shifted gears. Rents, which climbed quickly during the pandemic-induced e-commerce boom, peaked in 2024 and eased through 2025.

Bayanzadeh said rental growth has slowed as demand tied to online shopping and supply chain expansion has levelled off.

“While rental costs have since moderated and vacancy rates have risen, market conditions are beginning to recalibrate,” he said. “Looking ahead, a slowdown in new construction is expected to help rebalance supply and demand, supporting greater stability across the industrial market.”

As fewer new projects break ground, the gap between supply and demand is expected to narrow, especially for port-oriented facilities and modern warehouse space that are ideal for trade, logistics, and distribution.

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