Investors in Metro Vancouver are in for a treat this year, as the area’s commercial property market – especially the office segment – is currently the best nationwide.
In its analysis, commercial agency Devencore stated that vacancy rates for office space in the downtown area fell to 4.5% at the beginning of the year, from 5% a year ago.
Demand for Class A space was even stronger, with vacancy rates at 3.9% and average gross rents at above $51 per square foot.
The data came as approximately 1.6 million square feet of new offices, most of which are already claimed by tenants, currently undergo development. A total of 3.5 million square feet in 21 office buildings are slated for completion within the next 5 years.
“It is a historical time for Metro Vancouver’s commercial real estate,” Avison Young Vancouver market analyst Andrew Petrozzi told Western Investor.
Devencore attributed the market’s singular strength to historically high property values and sustained development.
“The market is showing no signs of slowing down in terms of rental rates. With various developments underway, but no major new office buildings delivered to the market until 2021, tenants with upcoming leases are competing within a very tight market,” Devencore Vancouver executive VP and managing principal Jon Bishop explained.
“We are seeing trends with large space users pre-leasing new AAA-class office space slated to be delivered in 2021 and beyond. In the meantime they are utilizing flexible swing space to hold them over until their new offices are completed.”