Q4 2019 Vancouver Summary Office & Industrial Statistics
Metro Vancouver office and industrial leasing markets only became more challenging in the final quarter of the year. Market conditions were characterized by little space available to lease and sharply higher lease rates. For many businesses lease renewal will be a very painful process.
The best that could be said is vacancy/availability rates didn’t go any lower with office vacancies during the quarter holding steady at 4.5%, while the industrial availability rate moved 10 basis points (bps) to 2.0%. From a year ago, the Lower Mainland office vacancy rate finished the year down 80 basis points, the industrial availability rate was dead even. Class A office rents in downtown Vancouver continued to spiral higher with top rents over $60.00 per square foot (psf). Combined with additional-rent of ~$25.00 psf, total occupancy costs (gross rent) in premier view space registered $85.00 psf, the highest in Canada, and nearing rates seen in select Manhattan and San Francisco submarkets. The trajectory for Class B office rents in the downtown core was no different, with rates approaching the $40.00 psf mark, up from the mid $20’s just 24 months ago. For warehouse users, region-wide lease rates now average $14.35 psf, with new construction in premier markets pre-leasing at rates at $15.00+ psf. Year-ago average warehouse rates were $12.44 psf, a 9% increase for the year [Note: 66% increase over the past 5-years/average lease term].
The prognosis is little better for occupiers in the year ahead. No new office space of significance will be added to the market until 2021, and the 3.3 million square feet of industrial space under construction is expected to leave the availability rate roughly where it is today. The Vancouver market is truly in unchartered waters.