Metro Vancouver industrial market report

Metro Vancouver industrial market trends

01. Slight uptick in vacancy, but market is steady

Vacancy saw a modest increase this quarter, edging up to 3.8% from 3.7% in Q4 2024 – a slight rise of just 10 basis points quarter-over-quarter. Since reaching a low of 0.3% in Q2 2022, the vacancy rate has steadily climbed, peaking at 3.8% in Q1 2025. Much of the rise occurred in 2024, when vacancy rose from 2.1% in Q1 2024 to 3.7% in Q4 2024, marking a total change within the year of 160 basis points and averaging 40 basis points per quarter.

In March 2025, several large-bay transactions exceeding 100,000 sf were finalized. These deals will contribute to absorption once the spaces are completed and occupied in the coming quarters. However, several new developments are under construction, and if delivered without pre-lease commitments, they are expected to further elevate vacancy levels.

02. Users motivated to purchase due to business demands

Recent sales, particularly in the strata sector, continue to demonstrate sustained demand from owner-users who are motivated to secure industrial properties to underpin their day-to-day business needs for the long term.

This quarter’s significant industrial transactions highlight that institutional investors remain active in the market. However, many are proceeding with caution, carefully assessing their options and waiting for the right opportunity before making a move.

While caution is prevalent among buyers, the underlying fundamentals of the industrial market remain strong, with continued interest from both owner-users and investors in Metro Vancouver with its proximity to international markets and constrained supply.

03. Political climate resulting in caution and uncertainty

Although lower interest rates have spurred activity, uncertainty persists due to rising tensions between Canada and the United States over increasing tariffs. British Columbia is projected to face relatively modest losses, ranking as the fourth least affected province, primarily because only 51% of its exported goods are shipped to the US.

Beyond tariff-related uncertainty, the upcoming Canadian federal election has led to delays as tenants and buyers adopt a wait-and-see approach.

With the federal election scheduled for April 28, 2025, we can expect greater national clarity in the coming months. However, the ongoing tariff negotiations may have more prolonged effects on the industrial market moving forward.