Downtown Vancouver could face an office space shortage by 2029: forecast | Daily Hive

With zero new office towers in the development pipeline, Downtown Vancouver could face an office space shortage by 2029: forecast

Deloitte Summit office tower in Downtown Vancouver. (Kenneth Chan)

It may be difficult to imagine right now, but today’s leasable office space supply surplus could become tomorrow’s shortage in the Downtown Vancouver peninsula — in just a few short years from now.

Downtown Vancouver’s premium office market could swing from today’s elevated vacancy rates to a shortage of available space before the end of the decade if no new office towers are built, according to a new market forecast from commercial real estate firm Avison Young.

The analysis suggests that emerging trend, while Downtown Vancouver’s class AAA and class A office vacancy rate currently sits at 12.9 per cent — totalling roughly two million sq. ft. of office space. It should be noted that the vacancy rate is a real estate reflection of whether a property is leased, not its actual occupancy rate by the tenant.

But that vacancy rate figure could shrink rapidly over the next four years as businesses continue leasing higher-quality space and the development pipeline for new office projects has effectively dried up.

You might also like:

Rather than worrying about too much office space, Avison Young argues the market is now entering a new phase where the bigger question is how quickly existing vacant offices will be leased.

The firm’s forecast is based on three possible leasing scenarios, all assuming no meaningful new premium class AAA or class A office buildings are completed through 2029.

Using the Downtown Vancouver market’s average annual absorption over the past decade — roughly 330,000 sq. ft. of leased space per year — vacancy would fall from today’s 12.9 per cent to about 6.2 per cent by 2029.

Even under a much slower leasing scenario, where demand reaches only half of the historical average, vacancy would still decline to about 10 per cent.

If leasing activity strengthens to 150 per cent of the historical average, however, vacancy would plunge to just 2.3 per cent by 2029 — returning to the very tight pre-pandemic levels.

That would represent an exceptionally tight market, where businesses have few options to choose from and landlords typically gain significant pricing power, placing upward pressure on rents.

The vacancy rate range considered for a healthy and balanced office market is generally between four per cent and eight per cent.

downtown vancouver office space market forecast avison young

Downtown Vancouver leasable office space market forecast, June 2026. (Avison Young)

Avison Young says the forecast reflects a continued “flight-to-quality” — a trend that first began before the pandemic — that has seen companies favour newer, amenity-rich office buildings over older properties.

While Downtown Vancouver has seen a number of major office towers completed over the past five years, many of those buildings have already secured tenants despite softer overall market conditions. According to Avison Young, that suggests demand for premium office space has remained resilient even as broader office markets have struggled with hybrid/semi-remote work and slower economic growth.

The current vacancy rate is largely the result of the market digesting that wave of recently completed office supply rather than a collapse in tenant demand.

What has changed is the new additional supply outlook.

With no significant new class AAA or class A office developments expected to be delivered over the next several years, the market no longer has additional supply reaching completion to replenish available space as existing vacancies are leased.

For businesses considering long-term office decisions, Avison Young suggests today’s relatively abundant selection of premium office space may not last much longer.

If leasing continues at or above historical levels, Downtown Vancouver’s current tenant-friendly conditions could gradually shift back toward a landlord’s market before the decade is over.

Vancouver Centre II office tower. (Kenneth Chan/Daily Hive)

Exterior of Deloitte Summit tower in downtown Vancouver. (Kenneth Chan/Daily Hive)

From 2022 to 2024, Downtown Vancouver added well over three million sq. ft. of premium office space, pushing vacancy higher. A substantial portion of this space was also pre-leased, especially by Amazon.

According to Avison Young’s calculation of Downtown Vancouver’s available office space, the overall leasable vacancy rate reached a low of two per cent in late 2019 — just before the pandemic’s onset.

This dwindling trend in the second half of the 2010s led to the previous office construction boom, resulting in the following major Downtown Vancouver office building completions:

2017-built — 31-storey The Exchange tower with 372,000 sq. ft. of class AAA office space (including 110,000 sq. ft. of office space subsequently converted into The Exchange Hotel)
2020-built — nine-storey Amazon YVR14 (402 Dunsmuir St.) building with 152,000 sq. ft. of class A office space (entirely pre-leased to Amazon)
2021-built — 25-storey 601 West Hastings at Waterfront Hub tower with 217,000 sq. ft. of class AAA office space
2022-built — 33-storey Vancouver Centre II tower with 370,000 sq. ft. of class AAA office space
2022-built — 10-storey The Offices building at Burrard Place with 120,000 sq. ft. of class AAA office space (entirely leased to lululemon)
2022-built — 24-storey Deloitte Summit tower with 355,000 sq. ft. of class AAA office space
2022-built — 37-storey The Stack tower with 550,000 sq. ft. of class AAA office space
2023-built — 33-storey B6 office tower with 562,000 sq. ft. of class AAA office space (with much of the space anchored by Microsoft)
2023-built — The Post complex with 1.1 million sq. ft. of class AAA office space (entirely pre-leased to Amazon)
2023-built — 30-storey Bosa Waterfront Centre tower with 350,000 sq. ft. of AAA office space, including 150,000 sq. ft. of strata office space upon initial completion

But with virtually no new class AAA or A projects expected after that wave of completions, which concluded in late 2023, the market is shifting from an oversupply mode to an absorption trend.

If leasing continues at historical levels, the excess space created during the recent construction boom could largely disappear before the decade ends.

Some of the major office projects that received the rezoning approval of Vancouver’s municipal government just before and during the first few years of the pandemic have either stalled or been quietly cancelled due to the sustained period of weak office market conditions. This includes the following major Downtown Vancouver projects that have not seen any activity years after approval:

2019-approved — 32-storey 1166 West Pender St. tower project by Reliance Properties with 360,000 sq. ft. of AAA office space
2019-approved (development permit application) — 13-storey 1296 Station St./False Creek Station tower by GWL Realty Advisors with 270,000 sq. ft. of AAA office space (now set to become a new two-tower, mixed-use rental housing and retail project)
2020-approved — 17-storey 720 Beatty St. tower project (on top of the Creative Energy steam plant) next to BC Place Stadium by Westbank with 583,000 sq. ft. of AAA office space (now the proposed site of Telus’ sovereign artificial intelligence data centre project)
2020-approved — 29-storey 443 Seymour St. tower project by Reliance Properties with 440,000 sq. ft. of AAA office space
2020-approved — 28-storey 619-685 West Hastings St. tower project by Uptown Property Group with 160,000 sq. ft. of office space
2021-approved — 23-storey 450 West Georgia St. tower project by Austeville Properties with 376,000 sq. ft. of AAA office space (now set to become a new two-storey retail building with a grocery store and pharmacy)
2021-approved — 22-storey Victory Square tower project by QuadReal Property Group with 263,000 sq. ft of AAA office space

In 2020, lululemon’s proposal to build a new standalone 13-storey headquarters complex at 1980 Foley St. in the False Creek Flats — just beyond the Downtown Vancouver peninsula — received City Council’s approval, with the project calling for nearly 600,000 sq. ft. of class AAA office space.

However, the lululemon headquarters building project has stalled, with the Vancouver-based apparel company more recently leasing 120,000 sq. ft. of office space at Burrard Place and about 300,000 sq. ft. of AAA office space formerly occupied by Microsoft and Sony Pictures Imageworks above the former Nordstrom store at CF Pacific Centre. Microsoft subsequently expanded its presence at the B6 tower, while Sony Pictures Imageworks relocated its headquarters to a large space within The Post that was originally slated to be a retail space.

aritzia cf pacific centre vancouver flagship

Future Aritzia flagship store at the former Nordstrom space in downtown Vancouver. (Kenneth Chan)

But some developers are already taking note of Downtown Vancouver’s potential office space demand upswing over the coming years.

Cadillac Fairview (CF), one of Canada’s largest commercial real estate developers and landlords, rebooted their controversial Waterfront Station office tower proposal in early 2026 with a brand-new, tree-inspired design, with a 22-storey tower containing 417,000 sq. ft. of AAA office space. In May 2026, the City of Vancouver’s Development Permit Board provided this revised concept at 601 West Cordova St. with the green light and some design change recommendations, but it still needs to go through a full development permit application process before it can reach the building permit stage.

Matthew Cavanaugh, a vice-president of development for CF, told Daily Hive Urbanized this past spring that his company has restarted this project precisely because of Vancouver’s strong office market fundamentals — with Downtown Vancouver still boasting the lowest office vacancy rate among major city centres in Canada and the United States — and the lack of any new supply in the development pipeline.

“We see a lot of strength in the Vancouver office market kind of emerging out of the turbulence of the last several years. We do see renewed interest in the office sector,” said Cavanaugh.

But he emphasized that CF would not build this tower based on speculation. They would not proceed until a lead tenant is secured. Construction would take about four years after the development permit approval and tenant pre-leasing.

555 601 west cordova street vancouver cf tower 2026

2026 concept of 601 West Cordova St., Vancouver. (Kenneth Chan)

601 west cordova street 555 west cordova street vancouver 2026 cadillac fairview james cheng

2026 concept of 601 West Cordova St., Vancouver. (James Cheng Architects/Cadillac Fairview)

2026 concept of 601 West Cordova St., Vancouver. (Kenneth Chan)

Similarly, the first phase of the Oakridge Park mixed-use complex reaching completion through 2027 includes over 700,000 sq. ft. of office space, including 420,000 sq. ft. of strata office space and 300,000 sq. ft. of leasable office space.

Last month, Chrystal Burns, the executive vice president of Canadian retail experience at QuadReal Proeprty Group, told Daily Hive Urbanized there are no plans to pivot any of Oakridge Park’s office space to a new hotel operation or other uses because this is the highest and best use for this component of the complex. She said it is centrally located in the city, well connected to public transit (with a short SkyTrain ride to Downtown Vancouver), and that this location will hold strongly throughout the cyclical fluctuations, with QuadReal believing in a long-term view.

Based on Avison Young’s latest full market report for the first quarter of 2026, while there is lower vacancy for class AAA and A office space, the vacancy rate for older, lower-tier properties remains particularly elevated, with a 23 per cent vacancy rate for Class C properties in Downtown Vancouver.

It should also be noted that Avison Young does not include the Yaletown district for its overall Downtown Vancouver office vacancy rate calculations.

You might also like: