Metro Vancouver’s industrial vacancy rate has hit a three-year high, says a new report from Avison Young.

Vacancy rose 60 basis points quarter-over-quarter to 1.6% in the third quarter. That level has not been witnessed since the 1.7% vacancy rate posted in the second quarter of 2020 but is still miniscule compared to most major North American industrial markets.

A balanced market tends to have a vacancy rate between 4% to 6%. As a result, Vancouver is “still a landlord’s market,” said Avison Young.

The full-service commercial real estate company noted that Metro Vancouver’s industrial market faces land constraints unlike other Canadian markets.

Metro Vancouver’s industrial land shortage has “passed the tipping point” as companies invest in other markets, according to a September report commissioned by the Greater Vancouver Board of Trade and NAIOP Vancouver.

Meanwhile, a Real Estate Board of Greater Vancouver study found that industrial land sales declined 59% year-over-year in the second quarter of 2023 due to high borrowing costs.