- What Industrial rents decreased slightly in Metro Vancouver in Q2
- Why There are 10 spaces greater than 100,000 sq ft available to rent
- What next Interest rate cuts have given a sense of optimism to the marketplace
Net rental rates in the Metro Vancouver industrial market decreased slightly in Q2 as vacancy rates hit their highest point in almost a decade, Avison Young said in a Q2 report released Thursday.
The brokerage said net rental rates dropped to $21.34/sq ft. The high-water mark of $21.99/sq ft was achieved in Q2 2023.
While net rents are falling, the additional rent component is increasing due to rising assessment values and property taxes.
“In Q2 2024, the average additional rent in Metro Vancouver reached $6.23/sq ft, marking a 21% year-over-year increase,” Avison Young said. “This increase pushed gross rental rates to a record high of $27.57/sq ft.”
The vacancy rate ticked up 80 basis points, reaching 2.9% quarter over quarter. Nonetheless, the brokerage said the industrial rental market in Metro Vancouver remains tight, particularly for high-quality space.
“While tenants may start off expecting greater leverage in lease negotiations, they have realized that lease rates remain high due to the limited supply of comparable spaces,” it said. “As a result, some tenants have adopted a ‘wait and see’ approach, conducting thorough due diligence and avoiding rushed decisions.”
The total availability rate for the city sits at 3.9%, down from 4.3% in the first quarter of the year. There’s about 5.5m sq ft of space available and an additional 1.1m sq ft of sublease space on hand.
There are 10 spaces of more than 100,000 sq ft available, compared with just three such options a year ago.
Meanwhile, Avison Young said, recent interest rate cuts have yielded more optimism to the market, particularly for strata developments.
Metro Vancouver has 6.7m sq ft of space under construction spread across 55 projects.
