Downtown Vancouver office space vacancy rate increases to almost 10%

Jan 10 2023, 11:53 pm

As of the end of 2022, the office space vacancy rate in downtown Vancouver has quadrupled from its 2019 pre-pandemic levels.

CBRE’s newly released leased office space market update for the fourth quarter of 2022 indicates Metro Vancouver’s overall office space vacancy rate has increased to 7.8% — up from 6.6% in 2022’s third quarter.

This accounts for the vacancy rates of 9.8% for the downtown Vancouver market and 5.8% for the suburban market, which are up from 7.1% and 6.2%, respectively, in the third quarter of 2022.

In real numbers, the vacancies translate to 3.02 million sq ft in direct space vacancies across the region, including 1.8 million sq ft in downtown Vancouver and 1.2 million sq ft in the suburbs, plus 991,00 sq ft in sublet space vacancies across the region, including 722,000 sq ft in downtown and 270,000 sq ft in the suburbs.

Office vacancy rates have not reached such heights since the middle of the 2010s, before the emergence and rapid growth of the tech industry in the region. In 2015/2016, office vacancy rates reached a high of about 11.5% for the entire region, 10.5% for the downtown Vancouver market, and 14% for the suburban market. Vacancies were even higher in the early 2000s, with the entire region as a whole at 17%, downtown at 14%, and the suburbs at 23%.

However, Metro Vancouver’s office space vacancies — overall region, downtown, and suburbs — are still the lowest amongst Canada’s 10 largest urban regions, which mostly saw vacancies trending upwards as well.

For example, Greater Toronto’s overall office vacancy has increased to 16.2%, including 13.6% in downtown and 19.3% in the suburbs, while the Montreal region’s overall vacancy is now hovering at 17%, with downtown at 16% and the suburbs at 18.3%.

Office space vacancy rates between 4% and 8% are generally considered healthy or within “balanced” territory.

the stack 1133 melville street vancouver construction june 1 2022

June 2022 construction progress on The Stack office tower at 1133 Melville Street, Vancouver. (Kenneth Chan/Daily Hive)

vancouver centre ii office tower september 19 2022

September 2022 construction progress on the Vancouver Centre II office tower. (Kenneth Chan/Daily Hive)

The fourth quarter of 2022 saw the largest quarter-over-quarter increase in downtown Vancouver’s office vacancies, which CBRE mainly attributes to the late 2022 completion of two major new office towers — The Stack and Vancouver Centre II — which are not yet fully leased.

GWL Realty Advisors’ Vancouver Centre II is a 33-storey tower with 371,000 sq ft of premium AAA office space, replacing Vancouver Centre’s parkade on Seymour Street between West Georgia and Robson streets. Oxford Properties’ The Stack at 1133 Melville Street is a 37-storey tower with 550,000 sq ft of AAA office space, and with a height of 530 ft, it is the new tallest office building in Metro Vancouver.

According to CBRE, the combined vacancies in both newly completed large office towers add about 296,000 sq ft of vacant supply to the market.

There is currently 3.68 million sq ft of office space under construction across Metro Vancouver, including 1.9 million sq ft downtown, which will reach completion by the end of 2023 and is 95% pre-leased.

About 1.1 million sq ft of this anticipated 2023 completion in downtown will be from the full completion of The Post by late 2023, which is entirely leased to Amazon. Another 562,000 sq ft will be from the completion of the 33-storey B6 office tower, with at least 400,000 sq ft leased to Microsoft for their expanded presence downtown.

the post amazon vancouver january 2023

Construction progress on The Post in Vancouver, as of January 2, 2023. (Kenneth Chan/Daily Hive)

1090 West Pender Street Vancouver

2019 artistic rendering of the B6 tower at 1090 West Pender Street, Vancouver. (Musson Cattell Mackey Partnership/BentallGreenOak)

The volume of new office space construction in Metro Vancouver is only second to Greater Toronto’s comparable 5.84 million sq ft, including 5.25 million sq ft in downtown Toronto, which is currently just 46% pre-leased.

As of the end of 2022, there is roughly a 50-50 split in the total rentable office space supply between downtown Vancouver (25.96 million sq ft) and the suburbs (25.14 million sq ft).

As for Metro Vancouver’s leased industrial space market, the vacancy rate in 2022’s fourth quarter was 1.2%, representing a 0.4% increase from the previous quarter. The immense demand and supply shortage has pushed average industrial rents towards $21 per sq ft — up from $14 per sq ft in pre-pandemic 2020’s first quarter. Soaring rental rates have sent some businesses towards owning their own industrial space or looking for space outside the region.

There is currently 9.3 million sq ft of new industrial space under construction across Metro Vancouver, but 6.9 million sq ft is already pre-leased. About 1.4 million sq ft of space reached completion in 2022’s fourth quarter.

Leased office space vacancies in major Canadian regions, Q4 2022

  1. Vancouver: 7.8%
    • Downtown: 9.8%
    • Suburbs: 5.8%
  2. Ottawa: 11.1%
    • Downtown: 12.2%
    • Suburbs: 10.2%
  3. Waterloo: 12.7%
    • Downtown: 22.8%
    • Suburbs: 7.8%
  4. Winnipeg: 13.6%
    • Downtown: 15.7%
    • Suburbs: 8.7%
  5. Halifax: 15.2%
    • Downtown: 18.8%
    • Suburbs: 12.8%
  6. Toronto: 16.2%
    • Downtown: 13.6%
    • Suburbs: 19.3%
  7. Montreal: 17.0%
    • Downtown: 16.0%
    • Suburbs: 18.3%
  8. London: 21.9%
    • Downtown: 26.2%
    • Suburbs: 9.3%
  9. Edmonton: 22.2%
    • Downtown: 23.0%
    • Suburbs: 21.0%
  10. Calgary: 30.0%
    • Downtown: 32.6%
    • Suburbs: 25.7%


Want to stay in the loop with more Daily Hive content and News in your area? Check out all of our Newsletters here.
Buzz Connected Media Inc. #400 – 1008 Homer Street, Vancouver, B.C. V6B 2X1 [email protected] View Rules
Kenneth ChanKenneth Chan

+ News
+ Venture
+ Real Estate
+ Urbanized