Vancouver Office Market Report
Metro Vancouver remained one of the tightest office markets in North America at year-end 2024 as vacancy and availability continued to stabilize with limited new supply in pipeline. Class A buildings continued to benefit from tightening vacancy in 2024 due not only to an ongoing flight to quality but also a flight to the newest class A buildings available. Regional vacancy and availability rates are returning to pre-2017 levels, which are widely considered to be indicators of a healthy office market for both tenants and landlords. Tightening vacancy in large suburban markets such as Burnaby and Surrey combined with a pickup in leasing activity downtown at year-end 2024 led regional vacancy to fall below 10%. Slower job growth is restricting office utilization rates, leading to weaker organic growth, particularly in downtown Vancouver and its submarkets, where the stabilization of leasing activity is occurring but at lower than historical levels. Regional absorption of more than 1.1 msf in 2024, led by Downtown (767k), Burnaby (312k) and the Broadway Corridor (123k) resulted in the region recording the second-most annual absorption since 2018. New construction remained largely at a standstill in Downtown Vancouver, which poses the risk of a potential shortage of class A space in the late 2020s given development timelines. Achievable office rents downtown will likely play a larger role in determining when new construction kicks off but a rebound in demand will also be needed along with substantially higher prelease commitments than seen in previous cycles. Mandates from large tenants outside the market, particularly global tech firms, were responsible for much of the office development in the 2010s, and the market likely needs them to re-engage, especially downtown, to kick off the next cycle.
Vancouver Industrial Market Report
GVA industrial vacancy rose to 2.6% at the end of 2024, which was the highest level of vacancy recorded in the GVA since 2015. Vacancy has been on the rise since the end of 2021. Annual absorption of ~270k sf in 2024 was the least amount of absorption recorded in the GVA since 2011 (~200k sf) but marked the 14th consecutive year of positive annual absorption. Sublease space availability climbed to ~2.3 msf at the end of 2024, which marked the highest amount recorded since 2008 when research coverage was initiated. GVA industrial market activity had gained momentum through the end of 2024 prior to U.S. tariff threats and upon resolution of those threats, that momentum is anticipated to resume. Maple Ridge-Pitt Meadows had the highest industrial vacancy in the GVA at 7.0%, followed by Vancouver (3.2%) and the Fraser Valley (3.1%). Richmond (1.0%) was the lowest followed by the North Shore (1.4%). Heightened uncertainty generated by threats of U.S. tariffs and their subsequent economic impact has also generated a more favourable environment for those tenants willing to transact as landlords try to limit vacancy. Sales and leasing activity had been focused on class A space and the small-format market with bulk space attracting attention at year-end 2024 as core markets benefited from tenants relocating from the periphery. Industrial strata sale proceeds of $797M in 2024 slightly surpassed 2023 ($790M) but are likely to remain stable although economic uncertainty may lead potential purchasers to delay/reconsider in 2025. GVA industrial sale proceeds of ~$1.1B in 2024 (not including strata) was the lowest since 2019 and the third lowest in the past decade thanks to a notable lack of dollar volume in the back half of 2024.
