The availability of office space in Vancouver is proving a big challenge for tenants.
The vacancy rate for the city’s downtown core is 5%, down from 7.1% a year ago; and for class A offices it’s just 4%.
The significant challenge for those wanting to start a new office-based business or expand an existing footprint in the city is highlighted in a new report from Devoncore.
“The next development cycle is underway, but there won’t be any major new office buildings delivered to the market until 2021,” said Jon Bishop, Executive Vice-President and Managing Principal of Devencore’s Vancouver office. “As a result, it’s going to be increasingly challenging for tenants to locate Class A space in downtown Vancouver over the next three years. Securing leases on larger contiguous blocks of space will be especially difficult.”
The lower availability means annual gross rents are climbing steadily and demand for strata space is high despite rates as high as $2,000 per square foot. Some tenants are renewing leases up to 2 years ahead of expiry.
“As vacancy rates continue to fall, it's not unusual to see multiple offers on top-tier spaces,” Bishop said. “There is some sublease space available at the moment, but this likely won’t remain on the market for very long.”