A combination of record-level property values, sustained development, and low vacancy rates is making Metro Vancouver’s commercial real estate sector possibly the best nationwide, according to market observers.
This is especially apparent in the office segment, commercial agency Devencore stated. Its latest analysis found that vacancy rates for all office types in the downtown area have shrunk to 4.5%, from 5% a year ago.
Class A vacancy rates are at 3.9%, pushing average gross rents to rates well beyond $51 per square foot.
“The market is showing no signs of slowing down in terms of rental rates. With various developments underway, but no major new office buildings delivered to the market until 2021, tenants with upcoming leases are competing within a very tight market,” Devencore Vancouver executive VP and managing principal Jon Bishop told Western Investor.
“We are seeing trends with large space users pre-leasing new AAA-class office space slated to be delivered in 2021 and beyond. In the meantime they are utilizing flexible swing space to hold them over until their new offices are completed.”
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In the downtown alone, approximately 1.6 million square feet of new offices are already under development. Most of this space is already claimed, however, attesting to the market’s inflamed demand.
“It is a historical time for Metro Vancouver’s commercial real estate,” Avison Young Vancouver market analyst Andrew Petrozzi said.
Across the metro area, approximately 3.5 million square feet in a total of 21 office buildings are projected for completion within the next half-decade. This is an all-time high in the number of commercial buildings simultaneously under construction, according to Lee & Associates vice-president of office properties Jason Marriott.