Metro Vancouver’s office market remains among the tightest in North America, says a new report from Newmark.

But Canada-U.S. trade tensions prompted some occupiers to pause their leasing decisions in the second quarter, the company says.

“Office leasing decisions require clarity on long-term business,” states the report authored by Andrew Petrozzi, Newmark’s head of Canadian research. “The potential impact of U.S. tariffs has injected significant uncertainty.”

Tightening vacancy in such large suburbs as Burnaby and Surrey, along with near-record lows in smaller suburban sectors, offset vacancy in all three of Vancouver’s urban areas.

A disconnect between downtown class A and B pricing expectations, combined with the buildings’ overhead, could prompt tenants to explore quality options in suburban locations that are more central to their employees, said Newmark.

Overall class A vacancy has stabilized around 10%. But an ongoing flight to quality pitting the best against the rest has caused some class A space to be viewed less favourably.

The region absorbed about 320,000 square feet as Burnaby led the way with 135,000 sf of positive absorption. Meanwhile, new construction remained “largely at a standstill” downtown, contributing to the rising risk of a class A shortage in the late 2020s due to the amount of development time needed.

Downtown office rent levels are expected to play a key role in determining when new construction kicks off.

Newmark says “demand needs to improve notably” to give developers the confidence to put shovels in the ground.

Pictured: The Stack office building in downtown Vancouver.

Photo: Newmark