April 15, 2014 (Vancouver, BC)
Office vacancy in Metro Vancouver continued to rise during the first quarter of the year according to a new report released today by Colliers International. The average vacancy rate across the region reached 8.7 percent, 1.5 percent higher than the same period the previous year, mainly as a result of 912,215 square feet of vacant headlease space added to the market and sublease space being added faster than it is being absorbed.
According to the Metro Vancouver Office Market Report, there are a substantial 1.45 million square feet of tenant requirements in the Metro Vancouver market, being driven predominantly by technology and digital media firms; however, this demand pales in comparison to the 5.83 million square feet of available office space.
Current market conditions have led sublandlords and landlords to aggressively compete for the limited number of tenants searching for space.
“We’re seeing that many tenants in Metro Vancouver have no immediate need to make any decisions. This is causing demand to remain relatively stagnant while they wait to evaluate their options until new supply hits the market,” says Maury Dubuque, managing director of Colliers International in Vancouver. “And with this increase in office space inventory, sublandlords and landlords alike are becoming increasingly creative when constructing deals — including various inducements, more attractive rates and options to incentivize tenants to renew or consider a new lease more quickly.”
As the office market across the region continues to deal with upward pressure on vacancy rates, analysis and forecasts by Colliers are not all unfavourable.
“The Metro Vancouver office market has been undersupplied with new inventory for many years, resulting in historically low vacancy rates. We are now about to enter a new market cycle, which will add new supply to the market and increase vacancy rates. However, this increase in vacancy will bring us to a level that is associated with a very healthy market. In addition, we continue to see the pipeline of new major tenants entering our market from outside Metro Vancouver continue to grow which will help contribute to the absorption of the additional new supply.” Maury Dubuque adds.
The Colliers International Metro Vancouver Office Market Report provides a breakdown analysis across Metro Vancouver’s sub-markets, including the North Shore, Burnaby, New Westminster, Richmond, Surrey and Langley.
> Download full report in Market Insights section.