Property consultancy Avison Young is reporting that overall absorption rates in what is Canada’s third largest city were positive over the course of 2010, while vacancy rates in the downtown area were at 5.2 per cent at the end of last year.
See examples of flexible office spaces in Vancouver here
Such limited availability leaves businesses in the city with very little room for manoeuvre in terms of expanding their office space presence and a number of experts are now urging developers to consider starting work on some new office towers.
Supply issues in downtown Vancouver are compounded by the expectation that only slightly more than 100,000 sq ft of new office space will be brought to market in 2011 and no new buildings are scheduled for completion in the area before the end of 2014.
Brian Pearson from Avison Young explained: “Large blocks of available contiguous space greater than 25,000 sq ft are virtually non-existent.
“Leasing activity exceeded 900,000 sq ft in the second half of 2010. However, 13 of the 16 notable transactions we recorded were renewals, which likely reflects the supply constraints prevailing in the downtown office market. Looking forward, current leasing momentum suggests the market will tighten even further in 2011.”
The cost of renting office space in downtown Vancouver is expected to increase slightly over the course of this year and into next but Avison Young’s analysts are convinced that momentum will gather behind the prospect of new office blocks being added to the city’s skyline over the next few years.
Editor’s notes: In 2015/16, office building vacancy rates reached 11.5% across the region with downtown Vancouver standing with a vacant rate of 10.5% and the suburbs standing at 14%.
These rates were not as high as they had been in the early 2000s following the bursting of the tech bubble. At that time, the vacancy rate across the whole region was 17% with downtown Vancouver standing at 14% and the suburbs at 23%.
At the end of 2022, the vacancy rate quadrupled from its pre-pandemic levels in downtown Vancouver, and Metro Vancouver’s rate stood at 7.8% up 1.2% from the previous quarter.
At that time, the vacancy rates were 9.8% for downtown Vancouver and 5.8% for the suburban market.
At the end of the first quarter of 2023, commercial real estate firm CBRE forecasted that the vacancy rate in downtown Vancouver would reach up to 11.6% by the end of 2023.
It stated that the increase would be driven by the largest new office supply cycle completion Vancouver has ever seen comprising major office building completions from the construction boom that began before the pandemic.
The firm advised that about 800,000 square feet of new office space reached completion in downtown Vancouver in 2021. A further 910,000 square feet reached completion in 2022, and a further 1.82 million square feet was expected to complete in 2023.
In Quarter 1 of 2023, the gross asking rent was CAD 42.74 per square foot per year.