Much like the availability in the residential real estate market, office vacancy in Vancouver has reached levels not seen in 21 years.
According to the CBRE, overall office vacancy in downtown Vancouver rose to 12.6 per cent in Q3, the highest since 2004. Class A office vacancy in downtown Vancouver hit 9.5 per cent.
Suburban office vacancy rose to 10.1 per cent, and the total office vacancy across Metro Vancouver stood at 11.4 per cent.
CBRE states that Vancouver’s Class AAA/A office market is undergoing a transformation.
“Despite strong demand for premium space as evidenced by lululemon’s new 300,000 sq. ft. lease at Pacific Center, shifts in tenant requirements are moderating the overall performance of this segment,” CBRE notes, adding, “Vacancy rates for high-quality office
space are stabilizing in response to these countervailing forces.”
CBRE reports that almost all Canadian markets are now reporting vacancies below post-2020 peaks, with Toronto leading the recovery.
“Toronto had an outsized impact on the overall reporting 1.6 million sq. ft. of net absorption. With no new supply this quarter, all activity took place in existing product and signals a firm rebound in the market, in particular downtown,” the report states.
CBRE says that demand in Vancouver wasn’t so enthusiastic.
“Montreal, Ottawa and Vancouver, meanwhile, noted slowing with each recording over 100,000 sq. ft. of negative net absorption. As has been the trend of late, larger blocks of space have become vacant, overshadowing other activity.”
An increase in inventory has also contributed to this trend. CBRE notes that, due to increasing industrial inventory, specifically in submarkets located North of the Fraser River, Metro Vancouver’s overall availability rate rose 20 basis points quarter-over-quarter to 5.3 per cent.
“Given the modest amount of space under construction and the current level of pre-leasing, the impact of new supply on vacancy is anticipated to be limited.”
The findings follow a similar trend in Q2 that Daily Hive Urbanized reported on earlier this year.