Downtown Vancouver’s class A office sector is nearing its vacancy floor, according to a new quarterly report from Newmark.

Despite ongoing economic uncertainty, the region remained one of the tightest office markets in North America in the first quarter of 2025 as vacancy and availability levels continued to stabilize amid limited new supply.

Class A vacancy has levelled off, suggesting a shift in tenant perception during an ongoing flight to quality. The report notes that some buildings classified as Class A may no longer align with evolving tenant expectations, signalling a potential disconnect that could cap vacancy rates for this category in 2025.

Vacancy tightened across major suburban markets—including Burnaby, Richmond, and Surrey—while the Broadway and Periphery submarkets in Vancouver also saw declines. Downtown Vancouver remains the only submarket with vacancy above 10%.

Regional absorption exceeded 260,000 square feet in first quarter, led by Richmond (85,000 sf), Downtown (48,000 sf), Surrey (43,000 sf), and the Broadway Corridor (40,000 sf), highlighting continued demand across urban and suburban areas. According to the report’s author, Andrew Petrozzi, the high level of leasing activity has not been seen since the pre-COVID-19 pandemic struck.

Meanwhile, Vancouver’s office leasing activity has yet to show any material impact from U.S. tariffs on Canadian goods announced earlier this year, the report states.

New construction in Downtown Vancouver remained largely paused, raising concerns over a potential Class A space shortage later this decade. While achievable downtown rents will influence future development, the report suggests that a strengthening local rebound may support the launch of at least one new tower before the next cycle begins. Broader development will likely hinge on the return of major global tenants—particularly tech firms—that drove much of the market’s growth in the 2010s.

Petrozzi previously told Connect that the lack of office projects in the office development pipeline could lead to a shortage of Metro Vancouver class A space in the late 2020s.

“There is going to be an issue, and it was raised during the talk [hosted in June 2024 in Toronto] by Connect CRE regarding new supply: What happens in four or five years when there’s no new construction?” said Petrozzi.

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