Office vacancies in Vancouver have dropped to a record low in the market — while rents have surged to an all-time high.
According to a new report from the CBRE Group, office vacancy in the region sits at 4.7% – its lowest level ever. And the lowest in all of Canada.
When looking specifically at Vancouver, the Class A downtown office vacancy rate dropped to 2.8%, down from 4.0% in Q4 2018.
That’s expected to get even tighter throughout 2019, according to the CBRE Group, a commercial real estate service and Fortune 500 company based out of Los Angeles.
While there is nearly 5.0 million sq. ft. currently under construction in the downtown core, with 1.4 million sq. ft. of new office development breaking ground this quarter, only 5.0%, or 250,000 sq. ft., is scheduled for completion this year.
“With the recent activity in the city’s downtown office market – last week’s sale of the Bentall Centre and today’s news of the sale of the former MacMillan Bloedel headquarters on West Georgia – investor interest in Vancouver’s office market remains one of the strongest in the country,” the report states.
It predicts Vancouver is poised to see the second-lowest vacancy rate in the Western Hemisphere this year.
Net rental rates for office space continue to rise, reaching a new record high of $35.92 per sq. ft. in the first quarter.
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Canada’s office real estate recorded the most vigorous leasing activity in years, according to the report, brought on primarily by the rapidly expanding tech sector.
The report concluded to show that around the country, the national office property vacancy rate decreased by 40 basis points (bps) quarter-over-quarter, to 11.5% in Q1 2019, the lowest level its been at since Q2 2015.