Metro Vancouver Real Estate Market Reports

Vancouver Office Market Report

Metro Vancouver remained one of the tightest office markets in North America after the first nine months of 2024 as vacancy and availability continued to stabilize with limited new supply. Class A buildings continued to benefit from tightening vacancy at third-quarter 2024 due to the ongoing flight to quality with most office leasing activity being captured in class A premises. Regional vacancy and availability rates are returning to pre-2017 levels, which are widely considered to be indicators of a healthy office market for both tenants and landlords. Rising vacancy in the suburbs is now contributing more to the overall increase in regional vacancy than downtown where vacancy is seen to be stabilizing, particularly in class A/B. Vancouver’s office submarkets, the Broadway Corridor and the Periphery, are more exposed to rising vacancy from the flight to quality due in part to the higher percentages of dated buildings in their inventories. Absorption of just ~707k sf after the first nine months of 2024, led by Downtown (529k) and Burnaby (173k), has the region on track to achieve the second-least amount of annual absorption since 2018. New construction remained largely at a standstill in Downtown Vancouver, which poses the risk of a potential shortage of class A space in the late 2020s given development timelines. Achievable office rents downtown will likely play a larger role in determining when new construction kicks off but a rebound in demand will also be needed along with substantially higher prelease commitments than seen in previous cycles. Large tenants from outside the market, particularly global technology firms, were responsible for much of the growth in office development in the 2010s, and will need to re-engage with the market, especially downtown, to launch new development.

Vancouver Industrial Market Report

GVA industrial vacancy rose to 2.8% at the third quarter of 2024, which was the highest level of vacancy recorded in the GVA since 2016. Vacancy has been on the rise since the end of 2022. Negative absorption of more than 1.8 msf in the first nine months of 2024 is the most negative absorption recorded in the GVA in that period since 2008 when research coverage was initiated. Sublease space availability spiked to almost 2.4 msf at third-quarter 2024, which marked the highest amount recorded since 2008 when research coverage was initiated. Preleasing for spaces larger than 75,000 sf in the GVA industrial market has largely evaporated in the past six months with rate erosion starting to manifest in deal negotiations. Maple Ridge-Pitt Meadows had the highest industrial vacancy in the GVA at 6.3%, followed by the Fraser Valley (4.1%) and Vancouver (3.1%). Richmond (1.6%) was the lowest followed by the Tri-Cities (2.0%). Industrial tenants in the market have a unique opportunity in the next six to 12 months to transact on more favorable terms, including free rent and TI allowances, than have been possible in almost a decade. Vendor pricing expectations for industrial land in Greater Vancouver remain elevated, which is hindering deal flow as developers are unable to make the costs pencil when considering redevelopment or new construction. Industrial strata sales started to recover after the first nine months of 2024 thanks in part to lower debt costs but remained notably lower than strata sales achieved in the same periods in 2021,2022 and 2023. Industrial dollar volume of almost $957M in the first nine months of 2024 is comparable to the level of industrial investment that typically occurred in Greater Vancouver within the same period prior to 2021.