Vancouver’s commercial real estate (CRE) investment has increased 21% from this point in 2023, says a news Altus Group report.

The market has recorded $7.2 billion in transaction volume year-to-date. The robust performance underscores continued investor confidence in the region despite challenges in the broader economic environment, said Altus.

However, the third quarter of 2024, saw a sharp slowdown in investment activity. Transaction volumes totalled $1.6 billion, marking a 58% drop from the second quarter. The earlier rush to close deals ahead of the federal capital gains tax increase on June 25 resulted in an unusually strong second quarter. Following this, many investors moved to the sidelines, seeking more favourable financing conditions.

Despite the third-quarter decline, Vancouver remains a top destination for CRE investment. According to Altus Group’s latest Canadian CRE investment trends survey, the city has overtaken other markets to become Canada’s most preferred location for investors.

The land market saw the highest transaction dollar volume, $3.3 billion, up 24% year-over-year. Investment in residential land rose 5% year-over-year while the ICI (industrial, commercial, and institutional) land segment accounted for $1.8 billion, a 45% jump from the third quarter of 2023. However, third-quarter 2024 investment in land slowed, with only $855 million transacted, representing a 51% quarter-over-quarter drop.

Industrial investment totalled $1.6 billion, a 9% year-over-year decline. Vancouver’s industrial availability rate rose to 5.1%—its highest since 2015—due to an inventory build-up and three consecutive quarters of negative absorption. Despite the current slowdown, with 4.6 million square feet of space under construction and more than 50% preleased), Vancouver’s long-term outlook as a critical trade hub remains positive.

The multi-family sector experienced the most substantial growth, with $967 million in transactions—a 75% year-over-year increase. Strong population growth continues to sustain rental demand, even as limited supply constrains the market. Further Bank of Canada’s interest-rate cuts are expected to bolster this sector more in 2025.

Retail investments totalled $851 million, marking a 57% year-over-year increase. Food-anchored retail strips remain a top investor choice due to their stability and focus on essential goods. Redevelopment projects, including Oakridge Park, the Post, and CF Richmond Centre, are set to enhance the sector’s long-term prospects, according to Altus.

Office transactions reached $566 million, a 14% year-over-year increase. Sales of several high-profile properties in downtown Vancouver contributed to this growth. Leasing activity remains concentrated in premium class-A buildings, while lower-grade class B and class C offices face risks of obsolescence. The office availability rate increased to 13.4%, the highest level in two decades, as new supply continued to outpace demand.

Despite the overall third-quarter slowdown, Vancouver’s demographic and economic fundamentals continue to attract investors. The market’s resilience is evident in its strong year-to-date performance, and sectors such as multi-family and retail are poised for further growth as financing conditions improve, said Altus.

Altus data highlights Vancouver’s ability to navigate current challenges, solidifying its position as Canada’s leading market for commercial real estate investment, the company concluded.

The report was co-authored by Jennifer Nhieu, an Altus senior research analyst, and Arthur Tang, a senior market analyst.