Metro Vancouver’s industrial vacancy rate approached a 10-year high during the second quarter, says a new Avison Young report.

Vacancy rose to 2.9%, the highest point since it reached 3% in the third quarter. However, the market remains tight with quality product in high demand.

“While tenants may start off expecting greater leverage in lease negotiations, they have realized that lease rates remain high due to the limited supply of comparable spaces,” said Avison Young. “As a result, some tenants have adopted a wait-and-see approach, conducting thorough due diligence and avoiding rushed decisions. This lack of urgency has extended the time required to negotiate deals.”

Net rental rates fell for the third-consecutive quarter, dropping to an average $21.34 per square foot. The highest rate, $21.99 psf, was recorded in the third quarter of 2023.

But the average additional rent jumped 21% year-over-year to $6.23 in the second quarter of 2024.

The Bank of Canada’s second interest-rate cut of the summer, to 4.5% from 4.75%, has brought renewed optimism — particularly for strata projects.

In March, 18.2% of strata projects under construction were presold. By June, the presold rate has risen to 24.5%.

“Although recovery remains slow, [strata] presales are expected to continue increasing, especially with further expected interest-rate cuts from the Bank of Canada,” said Avison Young.

Photo: Courtesy of Avison Young