Downtown Vancouver office vacancy rate now exceeds 10%, highest in 20 years

Apr 4 2023, 6:35 pm

There is an air of uncertainty in downtown Vancouver’s office market, with vacancies now hovering above 10% — the highest level in nearly 20 years, since 2004.

This week, two commercial real estate firms are reporting downtown Vancouver’s leasable office market has reached double-digit vacancy rates for the first quarter of 2023, with CBRE calculating a 10.4% vacancy rate and Avison Young indicating the rate is now 10.8%.

This is up from the 2022 fourth quarter vacancy rates of 9.8% according to CBRE and 9.6% according to Avison Young.

This is largely the result of the acceleration of businesses subleasing their spaces, and a wave of completions from new office supply reaching construction — the end of downtown Vancouver’s office construction boom that began before the pandemic. This includes The Stack, Bosa Waterfront Centre, and The Post’s south tower (Amazon).

As for the differences in vacancies between office quality types, Avison Young states the vacancy rates for downtown Vancouver are now 11.1% for premium class AAA space, which is typically a newly built space with modern designs and amenities. Class A is now at 9.2%, Class B is at 12.6%, and Class C is at 10.7%. Downtown Vancouver has 7.3 million sq ft of class AAA office supply, 8.5 million sq ft of class A, 6.6 million sq ft of class B, and three million sq ft of class C.

Avison Young notes the vacancies within the Yaletown sub-market have reached an all-time high of 15.9%, particularly because demand for class C office spaces — typically in older buildings — has weakened considerably due to tenants looking for quality and modern built-out spaces.

Yaletown’s class C office supply of 458,000 sq ft is experiencing a vacancy rate of 28.6%, followed by 16.5% for 1.02 million sq ft of class B supply and 5.8% for 637,000 sq ft for class A.

For Vancouver’s Broadway Corridor, this particular office sub-market is seeing an 8.9% vacancy rate, including 14.9% of the 2.1 million sq ft of class B supply, 11.1% for 1.04 million sq ft of class C, and 6.2% for 5.5 million sq ft of class A, according to Avison Young.

Based on Avison Young’s data, across all of Metro Vancouver, including downtown Vancouver, the office vacancy rate is now hovering at 9.3%, with nearly four million sq ft of head lease vacancy and 1.36 million sq ft of sub-lease vacancy.

Over a quarter (25.6%) of all available space is subleased, up from 22.5% at the end of 2022, according to Avison Young. Currently, 6.54 million sq ft of office space across 45 projects is under construction.

On the other hand, CBRE has a more optimistic calculation, with a lower regional vacancy rate of 8.4%, including 6.2% for the suburban market outside of the downtown Vancouver peninsula.

Office space vacancy rates between 4% and 8% are generally considered healthy or balanced.

These vacancy rates only account for technical space leases and do not account for how businesses are using these spaces, such as the ongoing impacts on actual office space usage from semi-remote work. Vacancies and sub-lease activity could further accelerate this year from a worsening economic outlook.

Although Vancouver’s downtown and regional office vacancy rates are now elevated, they are still the lowest among Canada’s major city centres and urban areas, and below the national averages of 18.4% for downtown areas, 16.8% for suburban areas, and 17.7% for overall urban areas, according to CBRE.

For example, CBRE states the Toronto area’s vacancy is hovering at 17.5%, including 15.3% for downtown and 20.1% for the suburbs.

Leased office space vacancies in major Canadian regions, Q1 2023: CBRE

  1. Vancouver: 8.4% 
    • Downtown: 10.4%
    • Suburbs: 6.2%
  2. Ottawa: 12.3%
    • Downtown: 13.2%
    • Suburbs: 11.6%
  3. Waterloo: 13.4%
    • Downtown: 23.3%
    • Suburbs: 8.7%
  4. Winnipeg: 13.9%
    • Downtown: 16.3%
    • Suburbs: 7.7%
  5. Halifax: 15.4%
    • Downtown: 18.4%
    • Suburbs: 13.3%
  6. Montreal: 16.8%
    • Downtown: 16.5%
    • Suburbs: 17.3%
  7. Toronto: 17.5%
    • Downtown: 15.3%
    • Suburbs: 20.1%
  8. London: 21.3%
    • Downtown: 25.7%
    • Suburbs: 8.2%
  9. Edmonton: 22.3%
    • Downtown: 23.5%
    • Suburbs: 20.3%
  10. Calgary: 29.9%
    • Downtown: 32.0%
    • Suburbs: 26.4%


Kenneth ChanKenneth Chan

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