Vancouver Office Market Report
Metro Vancouver remained one of the tightest office markets in North America at first-quarter 2025 as vacancy and availability continued to stabilize with limited new supply in the pipeline. Class A vacancy has stabilized as the bifurcation of the best from the rest during the well-documented flight to quality downtown may have revealed a segment of class A space that may not be viewed as favourably by tenants. This stabilization means that class A vacancy may be approaching a percentage floor in 2025 that could signal a disconnect between tenants’ class A expectations and the inventory definition of a class A building. Tightening vacancy in large suburban markets such as Burnaby, Richmond and Surrey, combined with declines in Vancouver’s Broadway and Periphery submarkets, have left Downtown as the only submarket exceeding 10%. Notable office leasing decisions are typically determined utilizing a long-term outlook and the potential impact of U.S. tariffs announced in early 2025 have yet to have a tangible impact on office leasing in the first quarter of 2025. Regional absorption of more than 260k sf in first-quarter 2025, led by Richmond (85k), Downtown (48k), Surrey (43k) and the Broadway Corridor (40k), demonstrated leasing demand in both urban and suburban submarkets. New construction remained largely at a standstill in Downtown Vancouver in early 2025, which poses a rising risk of a potential shortage of class A space in the late 2020s given development timelines. While achievable office rents downtown will likely play a larger role in determining when new construction kicks off, a growing rebound in local demand may provide the confidence needed to support one new tower in advance of the next cycle. Mandates from large tenants outside the market, particularly global tech firms, were responsible for much of the office development in the 2010s, and the downtown market likely needs them to re-engage for multiple office buildings to be developed.
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.
