Metro Vancouver’s office market remained among the tightest in North America during the second quarter of 2024, says a Newmark report.

Class A buildings continued to benefit from tightening vacancy due to an ongoing flight to quality. Most leasing deals involved class A premises.

“With new construction remaining largely at a standstill in downtown Vancouver, securing quality space will likely be a growing issue moving forward as tenants’ evolving needs remain unmet in obsolete class B-C buildings and the availability of class A space, particularly in new developments, continues to dwindle,” Andrew Petrozzi, the report’s author, told Connect.

Petrozzi’s comment echoes the sentiments he expressed in an interview with Connect in June. At that time, he said Metro Vancouver’s office market faces a potential class A office space shortage in coming years due to a lack of new projects in the development pipeline.

The report also noted the potential shortage of class A space in the late 2020s. Achievable rents are more likely to play a larger role in determining when new projects launch, rather than vacancy versus demand, Newmark predicts.

But the report suggests that, on the whole, the office market is in decent shape.

“Regional vacancy and availability rates are returning to pre-2017 levels, which are widely considered to be indicators of a healthy office market for both tenants and landlords, wrote Petrozzi, Newmark’s head of Canadian research, in the second-quarter report.

Tighter downtown vacancy offset weakness in the suburbs.

Overall vacancy stood at 9.2%, relatively unchanged from 9.3% at year-end 2023. Mid-year 2024 class A-B vacancy (8.45) was below the regional average.

The region had about 86 million square feet of office inventory with approximately 2.5 msf under construction.

Photo: Courtesy of Newmark