Metro Vancouver Office Vacancy Rates Increase Amid Development Slowdown

In Metro Vancouver, office vacancy rates have surged to 10.4% in Q2 2024, marking a 0.3% rise from the previous quarter. This increase, detailed in a recent Avison Young report, reflects a growing trend, although a slowdown in new developments may help stabilize the market.

According to the Avison Young report released on August 14, 2024, downtown Vancouver has experienced a significant jump in vacancy rates, climbing from 12.5% to 12.8% quarter-over-quarter. This rise is largely due to the recent completion of a new 32-storey, 534,000-square-foot office tower on West Pender Street, known as B6. Additionally, other large office spaces exceeding 100,000 square feet have entered the market, increasing the total available office space from 7.8 million square feet to 8.2 million square feet.

The report also reveals that the average office rent per square foot in Metro Vancouver now stands at $56.12. Over the next three years, around 3.7 million square feet from 32 new office projects, primarily in suburban areas, are expected to become available.

Metro Vancouver's overall office availability rate has risen from 13% to 14.2% year-over-year, a 0.6% increase since Q1 2024. Notably, Class AAA office spaces have seen a decrease in availability, dropping from 15.1% to 13.3% quarter-over-quarter.

In response to the rising vacancy rates, landlords are offering incentives and free rent to retain tenants in older office buildings. This approach aims to attract businesses seeking ready-to-move-in office spaces to avoid high construction costs.

Despite the current upward trend in vacancy rates, the market is anticipated to stabilize due to the deceleration in new office developments and limited options for significant tenant growth. Developers are expected to slow down their projects while awaiting stabilization in construction costs and potential adjustments to Vancouver’s view-cone policy, which preserves key water and mountain views from high-rise buildings.

For more details, read the full article on Business in Vancouver: Metro Vancouver Office Vacancy Rates Increase Amid Development Slowdown.