Growing investor confidence has boosted Vancouver’s suburban office market according to the Canadian arm of a global real estate firm.
There were 14 major deals closed by CBRE Vancouver’s National Investment Team on suburban office buildings in Q1 2018 compared to 8 in Q1 2017.
D the vacancy rate in the first three months of 2018 fell to just 8.1%, the lowest since 2001; and rental rates increased in 5 of the city’s 7 sub-markets.
“We expect the rising investor demand trend in the suburbs to continue as falling vacancy rates will result in lease rate growth,” said Tony Quattrin, Vice Chairman of the National Investment Team at CBRE Vancouver. “Interest from domestic and foreign investors remains strong for the suburban office market, particularly along suburban transit stations, supporting continued strong values in these areas. In fact, investors in the suburban office market are seeing returns up to 40% higher than downtown Vancouver.”
Tight Downtown benefits sub-markets across industries
The sub-markets are benefitting from Downtown Vancouver’s status as the second tightest office market in North America as economic conditions are increasing demand for space.
And the CBRE report found that it’s not just the fast-growing tech sector that is expanding its requirements. Those seeking suburban offices include government, construction, and engineering firms.
“There has been incredible demand for well located, new suburban office product and a notable flight to quality in the suburban market which is dominated with aging stock,” said Luke Gibson, VP of Office Properties for CBRE Vancouver. “Employers clearly see the value in locating themselves in the most desirable space in order to attract and retain top talent in a competitive environment.”