Downtown Vancouver office vacancy rate shrunk for the first time during the pandemic

Jan 13 2022, 2:00 am

For the first time in nearly two years, since the onset of the COVID-19 pandemic, Metro Vancouver’s office market saw its first vacancy rate contraction, providing evidence of the region’s strong office market fundamentals, fuelled by the tech industry’s growth.

CBRE reported today that the office vacancy rates for downtown Vancouver fell from 7.6% in the third quarter of 2021 to 7.2% in the fourth quarter of 2021. The suburban market also fell from 7.2% to 6.8% over the same period.

Metro Vancouver’s overall office vacancy rate — downtown and suburban, combined — in the fourth quarter of 2021 hovered at 7%, down from 7.4% in the third quarter.

The drop in vacancies occurred even with the completion of significant new office supply over the quarter, with 346,000 sq ft reaching completion in downtown, and 197,000 sq ft in the suburbs. About 72% of this new office space was already pre-leased.

Despite the pandemic’s ongoing impacts on the workplace, average asking lease rates in Metro Vancouver continued to rise, increasing by 9.7% year-over-year to $33.84 per sq ft.

Currently, there is 3.7 million sq ft of new office under construction across the region, including 2.9 million sq ft in downtown (67.6% already pre-leased) and 800,000 sq ft in the suburbs (44.2% already pre-leased).

Vancouver is continuing pre-pandemic trend of having the lowest downtown office vacancy rate in North America, followed by Toronto at 9.7% and Ottawa at 9.9%. In contrast, Edmonton and Calgary have some of the lowest downtown office vacancy rates, hovering at 21.1% and 33.2%, respectively.

When it comes to industrial space, CBRE states availability has dropped to a new record low of 0.9%, as of the fourth quarter of 2021. These shortage conditions persist despite 1.2 million sq ft of new construction completed during the quarter, offset by strong levels of pre-leasing due to high demand.

Currently, in response to the demand, there is a record high of 9.4 million sq ft of industrial space under construction in the fourth quarter, with 77% of this space already pre-leased.

Kenneth ChanKenneth Chan

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