Metro Vancouver office market report

Metro Vancouver office market fundamentals

Despite increasing vacancy rate, market is steady

The overall Metro Vancouver vacancy rate increased by 10 basis points from the previous quarter to 10.1% in Q1 2024. While most submarkets observed a rise in vacant space, the Downtown vacancy rate held steady at 12.5%.
Despite fluctuations in vacancy rates, the market has remained balanced and stable the last few quarters. Several larger companies have been swapping spaces to find locations that better meet their needs, akin to a game of "musical chairs."

Last of Downtown major new supply nearly complete

Between 2020 and year-end 2024, Downtown will see the addition of over 4 million square feet (msf) collectively of new office supply. Even when broken down annually, this is significantly higher than the annual average of 242,000 sf delivered in the prior decade.
During the pandemic, many tenants improved their office spaces to boost recruitment and employee retention, while fostering a more collaborative culture for a successful return to the office. However, there are no large block opportunities (more than 100,00 sf available) in newer buildings delivered since 2020, which presents a major challenge moving forward.'

Construction costs high, tenants want improved space

With construction costs remaining high, many tenants are seeking upgraded spaces. This has created high demand for well improved sublease opportunities, as sublease vacancy has dropped 27% over the past three quarters.
As such, unimproved and outdated spaces have been challenging to lease. To address this, many landlords have invested in show suites, which tend to be leased much quicker. Additionally, landlords have increased tenant improvement allowances to help offset build-out costs.