Looking for room to expand your business?
Downtown Vancouver’s supply of office space remains constricted, but Richmond and Burnaby have more than enough to go around.?
This according to commercial real estate specialist Avison Young, which released its year-end 2010 Metro Vancouver office market report Wednesday.
According to the report, downtown Vancouver’s vacancy rate dropped to 5.2% last year from 5.5% in 2009, pointing to an ongoing need for new office towers.
Avison Young principal Bill Elliott expects the downtown vacancy rate to drop below 5% in the next year, and preleasing activity to increase as developers scramble to break ground on new office developments.
The company said a downtown vacancy rate of 8% to 10% is considered balanced, allowing landlords to maintain rental rates and provide tenants with sufficient alternatives.
But the current market creates challenges for both landlords and tenants.
“While limited alternatives for tenants may allow landlords to push harder on lease rates, it also creates problems for landlords who are unable to accommodate expanding tenants or new entrants to the market,” Elliot said in a release. “For tenants, rising downtown lease rates and an inability to expand could see suburban options receive greater consideration.”
And a glut of new office space is still years away, the company said.
Only 131,500 square feet of planned office space is expected to come on stream this year, Avison Young explained, with no new office towers expected until 2014.
That might pose some challenges for businesses looking to expand or establish themselves in the downtown core, but Avison Young advisor Brian Pearson said there’s still a significant amount of space available in Richmond and Burnaby.
Richmond’s vacancy rate at the end of 2010 totaled 24.6%, the highest in Metro Vancouver, while Burnaby’s held steady at 13.2% throughout the year.
Pearson said this points to a dichotomy in the Metro Vancouver market, which has lots of space in some areas and very little in others.
In 2010, Metro Vancouver’s overall vacancy rate was reached 8.4% compared with 7.8% in 2009.
Said Pearson: “The Metro Vancouver office market, overall at 8%, is in line with what people consider to be a fundamentally healthy and sound market.”