High debt costs and ongoing changes in workplace arrangements were the main drivers of volatility
The Metro Vancouver office market saw “turbulence” in Q1 2023, even as opportunities remain for occupiers looking for high-quality office spaces, according to Avison Young.
“Deal velocity across Metro Vancouver remained constrained amid high costs of debt and ongoing changes in workplace arrangements,” Avison Young said. “As a result, all submarkets other than downtown saw negative absorption during the first quarter of 2023. Most submarkets experienced a rise in vacancy rates relative to the end of 2022.”
The downtown vacancy rate grew from 9.6% at the end of 2022 to 10.8% as of the first quarter.
“This movement was largely a result of accelerating sublease availability and new class AAA supply being delivered without full prelease commitments,” Avison Young said.
Overall vacancy in the Metro Vancouver area stood at 9.3%, due to the combination of unoccupied, newly delivered space and a growing number of subleases.
The market report noted that the technology industry felt the greatest pressure to sublease “both due to their increased workforce mobility relative to more traditional office-based industries, and an attempt to cut expenses.” Approximately 59% of Metro Vancouver’s sublease availability was in the downtown area as of Q1.
“These spaces represent a good opportunity for occupiers looking for built-out space and attain greater demand relative to shell space,” Avison Young said.
