Downtown Vancouver office vacancy below suburbs for first time in years | Daily Hive

Downtown Vancouver office vacancy rate drops below suburbs for first time in four years

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

The leased office space vacancy rate in downtown Vancouver saw a notable contraction to 10.7 per cent in the first quarter of 2025.

This is down from 11.5 per cent in the fourth quarter of 2024; the previous quarters in 2024 saw vacancy rates fluctuating between 11 per cent and 12 per cent, which suggests a plateau had been reached.

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According to commercial real estate firm CBRE, the first quarter of 2025 marks the first time since the second quarter of 2021 that the vacancy rate in downtown Vancouver has been lower than in Metro Vancouver’s suburban markets. This indicates that demand is finally starting to catch up with the newly completed supply.

In fact, the drop in the vacancy rate in downtown Vancouver was largely driven by an uptake in premium Class AAA office space and Class A space, which saw its lowest vacancy since the third quarter of 2022. This is indicative of a continued flight to quality spaces that are newer, substantially renovated, and/or feature more amenities, compared to the lower calibre spaces of Class B and Class C, which have vacancy rates that are a few percentage points higher.

Currently, just 29,000 sq. ft. of new office space is under construction in downtown Vancouver — down significantly from the years-long office building boom that first began before the pandemic, and ended in early 2023, producing over four million sq. ft. of office space throughout its run.

Over 90 per cent of newly built office supply in downtown Vancouver has been occupied, which indicates that vacancy should continue to decline, especially with a lack of new supply in the pipeline.

Previously approved major office projects have not progressed toward construction, and proposals for such developments have shifted toward greater — or entirely — residential and/or hotel uses, including the 800 Granville proposal.

While there is currently no push for residential conversions of existing office buildings, this week saw a notable announcement of a proposed 100 per cent conversion of a 1966-built, 12-storey, 96,000 sq. ft. office tower into a hotel with 180 guest rooms.

A similar conversion has also been seen for some new and future major suburban office projects.

800-876 Granville Street Vancouver revision bonnis march 2025 design

March 2025 revised concept of the 800-876 Granville Street redevelopment in downtown Vancouver. (Perkins&Will/Bonnis Properties)

1111 west hastings street le germain hotel vancouver

Existing condition of the office building at 1111 West Hastings Street in downtown Vancouver, the future site of Le Germain Hotel Vancouver. (Google Maps)

During the first quarter of 2025, about 220,000 sq. ft. of space was newly leased, whereas just 10,000 sq. ft. was absorbed in the suburbs.

CBRE also highlighted that the region’s suburban vacancy rate has increased significantly by 3.1 per cent to 10.8 per cent, as of the end of March 2025. About 553,000 sq. ft. of new space is currently under construction in the region outside of downtown Vancouver.

Overall, Metro Vancouver’s leased office vacancy rate is now hovering at 10.7 per cent.

It is important to note that office vacancy rates should not be confused with actual office use occupancy rates, which are both impacted by semi-remote and hybrid work models.

It remains to be seen how the Canada-U.S. trade war initiated by President Donald Trump’s tariffs will impact business decisions and the office market. According to CBRE, there has yet to be an impact on office demand.

Although downtown Vancouver’s office vacancy rate remains heightened compared to the period just before the pandemic, it still has the lowest office vacancy rate among Canada’s major city centres.

As of the first quarter of 2025, the downtown vacancy rates were 30.2 per cent in Calgary, 21.4 per cent in Edmonton, 18.2 per cent in Winnipeg, 32 per cent in London, 28.8 per cent in Toronto, 15.7 per cent in Ottawa, 18.9 per cent in Montreal, and 16.1 per cent in Halifax.

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