- What Vancouver’s office market remained tight in Q1
- Why Limited supply has kept it competitive
- What next 2m sq ft of new supply is in the pipeline
Limited new supply has led to Vancouver remaining one of the tightest office markets on the continent, Newmark said in a market report to be published today.
Throughout Q1, Class-A vacancy stabilized as the flight to quality in the city’s downtown has separated the “best from the rest” within the Class-A sector. The stabilization, Newmark said, may indicate that certain Class-A buildings aren’t seen as being truly Class A by some tenants; there may be a disconnect between what tenants expect in a Class-A building and the inventory definition of a Class-A building in Vancouver.
A total inventory of 67m sq ft was recorded across the Greater Vancouver region, up from 66m sq ft in Q1 of 2024. Even with the extra space, vacancy rates for the metropolitan area remained the same at 9.1%. Q1 saw a net absorption of 263,000 sq ft led by Richmond, which absorbed 85,000 sq ft.
Downtown Vancouver experienced the highest vacancy rate at 11.7% — the only submarket with vacancy exceeding 10%. It came in well behind the North Shore, including the City of North Vancouver, District of North Vancouver and West Vancouver, at 2.2%.
Office space in the region’s Southeast was also tight, with Surrey seeing a 4.3% vacancy rate and Langley seeing 2.9% vacancy. Surrey remained a tight market due to a lack of new supply, which led to positive absorption for the first quarter. Just 400,000 sq ft of new supply is under construction in the city.
Across Greater Vancouver, there is nearly 2m sq ft of new supply under construction. Newmark noted, however, that construction remains at a standstill in downtown Vancouver, which would lead to a shortage of Class-A spaces in the late 2020s.
Rents for existing stock averaged $40/sq ft across the region and peaked at $48/sq ft in the Broadway Corridor.
