The rebound for Canadian office markets continues in the third quarter of 2022, as Vancouver is among many Canadian cities reporting drops in office vacancy rates.
According to the latest data from Commercial Real Estate Services (CBRE), demand for quality office product within the Vancouver downtown core is one of the main drivers of declines in vacancy rates.
“Vacancy in Class AAA inventory has declined 110 bps to 4.6% and is the lowest of any downtown class,” reads the CBRE report.
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“Canadian office markets have been remarkably resilient despite enduring years of pandemic-related challenges, new supply additions, and ongoing remote work issues, as well as a pending economic slowdown,” said CBRE Vice Chairman Paul Morassutti in a statement.
“These latest figures offer compelling evidence that energy and momentum are returning to our cities and helping to bolster leasing activity. Although all eyes are focused on the economy, which is proving more difficult than usual to predict.”
On the other hand, for the first time in four quarters, Vancouver’s overall office vacancy rate actually increased in Q3, “rising 30 bps to 6.6%,” says CBRE.
For context, the Q2 report revealed that overall vacancy rates in Vancouver were at 6.3%.
“The suburbs led this change through a handful of new-to-market subleases from tenants no longer requiring the full extent of their space.”
Inventory is up thanks to recent listing activity, but direct vacancy remained “somewhat level.”
“Looking forward, 83.8% of all space currently under construction within the downtown core is already pre-leased, further supported by an estimated 150,000 sq ft of deal activity within the last quarter alone,” CBRE adds.
On the industrial side, the availability rate in the manufacturing and distribution sectors fell by 20 bps quarter-over-quarter to a new low of 0.8%. Not only is 0.8% a new low, but it’s also actually the lowest ever in the industrial sector. The CBRE adds that tenants will find limited availability as 80% of the space is pre-leased.
“Despite over 10.1 million sq ft of space currently under construction, tenants will continue to face limited availability as 79.4% of this space has already been pre-leased.”