2.3 million sq ft of office space is currently vacant in downtown Vancouver

Sep 28 2022, 6:20 pm

The rental office vacancy rate in downtown Vancouver dropped in the third quarter of 2022 from 7.3% to 7.0%, a reflection of “renewed optimism” in the local office market, according to a new quarterly report by commercial real estate firm Colliers.

A rate of 7% is still within the range of what is considered a healthy and balanced office market, which is generally between 4% and 8%.

Downtown Vancouver’s total office vacancy amounts to a real total of about 2.3 million sq ft of floor area. This is roughly equivalent to the combined overall office space of Bentall Centre’s four towers.

In contrast, Toronto’s office vacancy rate is 8.6% downtown (10.4 million sq ft) and 11.5% for the suburbs (15.1 million sq ft), while Montreal is at 13.4% downtown (7.3 million sq ft) and 16.2% in the suburbs (7.2 million sq ft).

Calgary’s office market slump, now approaching a decade, has seen vacancy rates trend to 31.4% in the downtown (13.8 million sq ft), and 18.6% in the suburbs (6.1 million sq ft).

Over the final quarter of 2022, downtown Vancouver will see the largest wave of office building completions yet from the office building boom that began before the pandemic. This includes 540,000 sq ft from The Stack at 1133 Melville Street, 517,000 sq ft from The Post’s South Tower for Amazon’s corporate office at 349 West Georgia Street, and 355,000 sq ft from Bosa Waterfront Centre at 320 Granville Street.

Although downtown Vancouver’s office vacancy is now considerably higher than the pre-pandemic 2019 vacancy of about 2%, it is still amongst the lowest of North American major downtown office markets, and average asking rents continue to see upward pressure — increasing 2% in the last quarter and 17% in the past year.

“With no new towers added downtown this quarter, there is a growing list of tenants actively searching for space and chasing a shrinking range of options, forcing them to look at buildings that may not be completed for years,” said Susan Thompson, associate director of research at Colliers, in a statement.

The suburban office market in Metro Vancouver held steady at 4.8%, which is attributed to its growing demand due to lower rents, the abundance of parking, and the growth of flexible, hybrid, semi-remote work arrangements.

But where Metro Vancouver’s commercial space market is challenged is in industrial space, with the rental industrial vacancy rate increasing slightly to 0.2% in the third quarter from the record low of only 0.1%. The extremely low available industrial space supply has pushed asking rents by 6.5% quarter-over-quarter to $20.44 per sq ft, which follows other consecutive major increases due to the region’s long-running supply deficit.

The 0.2% industrial vacancy rate was reached even with 1.5 million sq ft of new industrial space reaching completion and being absorbed by businesses, with the vast majority of the space already pre-leased. The largest added supply was Amazon’s new two-storey distribution centre at 8351 Fraser Reach Court in South Burnaby, which has a floor area of 707,000 sq ft.

Over the final months of the year, about 1.4 million sq ft of new industrial space will reach completion.

“Even with this record-setting level of construction, Vancouver’s industrial vacancy is the lowest in North America and the market is expected to remain white hot for the foreseeable future,” said Thompson.

2022 third quarter office vacancy rates

  • Victoria
    • Downtown: 6.2%
    • Suburban: 5.6%
    • Total: 5.9%
  • Vancouver
    • Downtown: 7.0%
    • Suburban: 4.8%
    • Total: 5.8%
  • Edmonton
    • Downtown: 19.2%
    • Suburban: 18.6%
    • Total: 19.0%
  • Calgary
    • Downtown: 31.4%
    • Suburban: 21.5%
    • Total: 27.5%
  • Saskatoon
    • Downtown: 21.6%
    • Suburban: 7.9%
    • Total: 14.5%
  • Regina
    • Downtown: 18.4%
    • Suburban: 13.3%
    • Total: 17.5%
  • Winnipeg
    • Downtown: 14.1%
    • Suburban: 8.8%
    • Total: 12.7%
  • Waterloo
    • Downtown: 18.0%
    • Suburban: 10.4%
    • Total: 13.3%
  • Toronto
    • Downtown: 8.6%
    • Suburban: 11.5%
    • Total: 10.1%
  • Ottawa
    • Downtown: 11.0%
    • Suburban: 10.4%
    • Total: 10.6%
  • Montreal
    • Downtown: 13.4%
    • Suburban: 16.2%
    • Total: 14.7%
  • Halifax
    • Downtown: 17.5%
    • Suburban: 11.8%
    • Total: 14.1%
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