Vancouver’s downtown office vacancy rate has reached its highest point in almost two decades but rents remain elevated, say Colliers reports.

However, further vacancy increases may prompt landlords to adjust their asking rates or provide more inducements in what is becoming a tenant’s market.

Colliers attributed the downtown and overall vacancy increases to a sharp decline in tech-company downtown leasing activity, the changing nature of office-space utilization and increased adoption of hybrid work models.

Downtown vacancy rose to 11.9% in the third quarter of 2023, and Metro Vancouver’s overall office vacancy rate of 8.6% marked a six-year high. Total office vacancy increased 120 basis points quarter-over-quarter, according to the two reports, but remains the lowest among Canadian major markets.

The region has Canada’s highest office sublease-space ratio, standing at almost 30%. But Metro Vancouver average net asking rent remains the highest among Canada’s major office markets, standing at $34.86 per square foot in the third quarter.

But further vacancy increases may prompt landlords to adjust their asking rates or provide more inducements in what is becoming a tenant’s market.

The reports were headed by Colliers researchers Adam Jacobs and Susan Thompson, respectively.