Downtown Vancouver office vacancy rate sees improvement

Views of downtown Vancouver office towers from the rooftop of The Stack office tower. (Kenneth Chan/Daily Hive)

The leased office vacancy rate of downtown Vancouver saw its first decrease in a year, according to commercial real estate firm CBRE’s latest market update.

Downtown Vancouver’s office vacancy rate fell from 11.8% in the third quarter of 2023 to 11.0% in the fourth quarter of 2023.

This decrease was driven by 212,000 sq ft of net absorptions in leased office space in the city centre. The year saw a total of 292,000 sq ft of net absorption for the area, particularly in numerous full-floor leases in Class A office space, which are typically older buildings.

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CBRE states there will be a continued gradual rebound of the office market, as no construction starts on new office building projects are expected over the next few years.

But the suburban office vacancy rate (the Metro Vancouver region outside of downtown Vancouver) increased from 7.2% in the third quarter of 2023 to 7.7% in the fourth quarter of 2023.

As a whole region, Metro Vancouver’s office vacancy rate experienced a slight decrease from 9.6% in the third quarter of 2023 to 9.4% in the fourth quarter of 2023.

By the end of 2023, about 3.11 million sq ft of new office space was under construction across Metro Vancouver, including 1.15 million sq ft within downtown Vancouver and 1.96 million sq ft in the suburban areas.

CBRE has indicated that 90% of the office space currently being built in downtown Vancouver is already pre-leased, while the opposite is true in the suburbs, where only 17.7% of the office space is pre-leased.

The completion of the B6 office tower with 562,000 sq ft of Class AAA office space in early 2023 will represent the end of the current office building construction boom in downtown Vancouver, which began before the pandemic.

At the end of 2022, downtown Vancouver’s office vacancy rate reached the low double digits for the first time since about a decade ago. By the end of 2019, just before the pandemic, the office vacancy rate dipped to just 2% due to the enormous demand driven by Vancouver’s booming tech industry.

A healthy office vacancy rate for a market is generally considered between 4% and 8%.

Although office vacancy rates are currently heightened, Metro Vancouver’s downtown, suburban, and regional (whole) office vacancy rates are still the lowest amongst the major urban centres of Canada and the United States. For instance, the office vacancy rate for downtown Seattle in the third quarter of 2023 was 23.4%.

Here is how Vancouver’s office market compares with other major Canadian urban centres, according to CBRE’s calculations as of the fourth quarter of 2023:

Vancouver
- Downtown: 11.0%
- Suburban: 7.7%
- Regional: 9.4%
Ottawa
- Downtown: 14.2%
- Suburban: 12.5%
- Regional: 13.3%
Toronto
- Downtown: 17.4%
- Suburban: 20.3%
- Regional: 18.7%
Halifax
- Downtown: 17.9%
- Suburban: 11.5%
- Regional: 14.1%
Montreal
- Downtown: 18.0%
- Suburban: 17.6%
- Regional: 17.8%
Winnipeg
- Downtown: 18.3%
- Suburban: 10.9%
- Regional: 16.2%
Edmonton
- Downtown: 22.9%
- Suburban: 18.7%
- Regional: 21.4%
Waterloo
- Downtown: 23.3%
- Suburban: 9.4%
- Regional: 13.7%
London
- Downtown: 28.5%
- Suburban: 10.6%
- Regional: 24.0%
Calgary
- Downtown: 30.2%
- Suburban: 24.2%
- Regional: 27.9%

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