The Metro Vancouver office market is into double-digit vacancies while industrial space is posting a tight 3.3% vacancy rate, down from 3.7% a year ago, according to a report from Colliers International.
This year, 10% of the 54.9 million square feet of office space in the region has gone dark, with subleases accounting for 14.2% of the vacancies.
The office market expanded by nearly one million square feet so far this year as three new office buildings completed downtown, 84 per cent of which had been preleased.
Owners of older buildings, who are trying to retain tenants in the face of the new competition, are feeling the pressure, Colliers notes. Inducements to tenants in such properties are becoming common, the broker notes.
The industrial sector, composed of 191 million square feet in total, is much stronger, with take up of more than 4.4 million square feet in the first half of this year. Again, however, it is new developments – that offer warehouse ceiling heights and other amenities demanded by the distribution industry – which is leading the demand.
“With current vacancies comprised largely of older-generation product, [these] landlords are increasingly willing to offer discounted rental rates in order to remain competitive,” according to Colliers.
Since 2013, almost six million square feet of new industrial space has been built across Metro Vancouver, according to a report from Avison Young, which cautions that this “has pushed the region closer towards an acute industrial land shortage.”
