The recession continues to push up vacancy rates of prime commercial space in downtown Vancouver, according to a new report from real estate advisory and brokerage firm Newmark Knight Frank Devencore.
Vacancy rates of Vancouver's Class A and Class B office buildings rose on average to 4.2% by the end of 2008, up from 2.5% at the end of 2007. Roughly 1.1 million square feet of space is now vacant. That's an increase from the 510,000 square feet of vacant space at the end of 2007.
The rise has been driven largely by subleased space coming back on the market as businesses in the resource, high tech, software, engineering and financial sectors consolidate or scale back operations.
The Class A sector has seen the most negative absorption over the last half of 2008 as vacancy rates rose to 4% from 2.1%. Approximately 642,000 square feet of commercial space was available, and the amount continues to rise in 2009's first quarter.
The report noted that larger contiguous blocks of space are coming back on the market, which is a substantial change from a year ago when none was available.
The vacancy rate of downtown Vancouver's Class B offices has also risen to 4.5% from 3.2%. More than 375,000 square feet of space was available by the end of 2008, up from just over 110,000 in 2007.
Rental rates have also started to drop, with some buildings posting a 20% decline from average highs in 2008.