Downtown Vancouver's office vacancy rate forecast to reach up to 11.6% in 2023

Mar 7 2023, 9:50 pm

The vacancy rate for leased office space in downtown Vancouver will continue to creep upwards this year.

Commercial real estate firm CBRE is forecasting the vacancy rate in downtown Vancouver will reach up to 11.6% by the end of 2023. This is up from 9.8% in 2022, and about 2% in early 2020 before the pandemic.

However, the increase is driven not by businesses leaving their spaces, but by the largest new office supply cycle completion Vancouver has ever seen. These major office building completions are from an office building boom that began before the pandemic.

The total inventory of office supply in downtown Vancouver will reach 27.78 million sq ft — up from 25.96 million sq ft in 2022, and 24.92 million sq ft in 2021.

About 800,000 sq ft of new office space reached completion in downtown Vancouver in 2021, another 910,000 sq ft reached completion in 2022, and 1.82 million sq ft is expected for 2023.

Some of the largest full completions in 2023 include The Post‘s 1.1 million sq ft of office, which is entirely pre-leased to Amazon, as well as the B6 tower, which is largely leased to Microsoft (400,000 sq ft of 562,000 sq ft).

As such, the office vacancy rate in downtown Vancouver is expected to stabilize at or near its current level this year.

“Amid a flight-to-quality by office tenants, Class A buildings will continue to perform well and rates will hold firm for quality space. Landlords of older, less amenitized buildings will need to invest capital to make them more competitive and attractive, especially with the return to office trend gaining momentum,” reads a report.

The forecasted office vacancy rate high in 2023 is still lower than the 14% in the early 2000s at the peak of the tech burst.

And while the 2023 forecasted rate is historically high for Vancouver, it is still the lowest office vacancy rate amongst Canada’s major downtowns. Only the downtowns of Quebec City and Ottawa come close.

Metro Vancouver’s suburban office market — outside of downtown Vancouver — including Central Broadway and Mount Pleasant is still in healthy territory, with a 6.3% office vacancy forecast in 2023 — up from 5.8% in 2022.

A healthy and balanced office market is generally between 4% and 8%.

Forecasted downtown office vacancy rates

  • Vancouver
    • 2023 forecast: 11.6%
    • 2022: 9.8%
  • Calgary
    • 2023 forecast: 31.5%
    • 2022: 32.6%
  • Edmonton
    • 2023 forecast: 24.1%
    • 2022: 23%
  • Saskatoon
    • 2023 forecast: 19.9%
    • 2022: 22.8%
  • Winnipeg
    • 2023 forecast: 17.7%
    • 2022: 15.7%
  • Waterloo
    • 2023 forecast: 26.3%
    • 2022: 26.2%
  • Toronto
    • 2023 forecast: 17.3%
    • 2022: 13.6%
  • Ottawa
    • 2023 forecast: 13.7%
    • 2022: 12.2%
  • Montreal
    • 2023 forecast: 17.4%
    • 2022: 16%
  • Quebec City
    • 2023 forecast: 12.5%
    • 2022: 12.1%
  • Halifax
    • 2023 forecast: 20%
    • 2022: 18.8%
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