The office market in Greater Vancouver saw a higher vacancy rate in the fourth quarter of last year, rising 1.2 percentage points annually to 9.8 per cent, according to commercial real estate services firm Colliers Macaulay Nicolls Inc.
The higher vacancy rate, along with the negative absorption of 67,000 square feet in Q4, was due to “uncertain market conditions and companies considering their office utilization strategy,” Colliers said in its quarterly Vancouver office market report released Jan. 13.
Absorption is the sum of square feet that become occupied, minus the sum of square feet that become vacant, in a given period.
Colliers said demand for Greater Vancouver office space has been fluctuating over recent years, causing new office developments to be shelved or repurposed.
The company said the vacancy rate in Vancouver’s downtown core declined from 11.9 per cent in Q3 to 11.2 per cent in Q4. However, it said the real vacancy rate is actually closer to 12.9 per cent, given the estimated 500,000 square feet of “shadow space” – office space that is vacant but not publicly marketed or advertised.
The vacancy rate in Greater Vancouver has steadily tripled from about three per cent in Q1 2020 to more than nine per cent last quarter.
The result is a favourable market for tenants, Colliers said, especially for Class B and C buildings with less esthetic appeal, fewer amenities or non-central locations. These types of buildings had an average vacancy rate of 12.8 per cent in 2024, compared to about eight per cent for recently built Class AAA buildings.
“The phenomena of flight to quality remains present in the market today, as evidenced by the positive annual absorption of upper-class office buildings and negative absorption of lower-class office buildings in both the downtown market and the [Greater Vancouver] market,” the report said.
Other markets like Burnaby and Vancouver’s Broadway corridor also favour tenants, Colliers said, with landlords having trouble filling office space if they are unwilling to improve their properties, allow flexible lease arrangements or negotiate deal terms.
Colliers noted that the average time on market is around 480 days for headlease space and around 350 days for sublease space. Headleases are between landlords and tenants, while subleases are between tenants and subtenants. Larger spaces tend to sit on the market longer, the report said, with most completed deals being for 10,000 square feet or less.
The region’s technology sector accounted for the lion's share (32 per cent) of leasing activity in Q4, followed by education (13 per cent), legal services (12 per cent) and health care (10 per cent). Leasing activity is measured by square footage sought.
Notable lease transactions last quarter included a new deal for 81,747 square feet in B6 by Connor, Clark & Lunn Financial Group Ltd.; a new deal with Sony Pictures Imageworks for 52,315 square feet in The Post; and a renewal of 41,558 square feet in Burnaby’s Lake City Centre by AECOM.
Colliers said the weighted average asking net rent in Greater Vancouver in Q4 was $33.17 per square foot, down 4.3 per cent year-over-year. But for downtown Class AAA buildings, the average asking rent exceeded $50 per square foot.
The report also includes data on new office construction. It said Burnaby was the most active market for new construction in Q4, representing 21 per cent of construction activity. Elsewhere, notable projects under construction include The Hive in False Creek Flats by BentallGreenOak and City Centre 4 in Surrey by Lark Group.
