No cause for alarm as downtown Vancouver office vacancy rate breaks 10%, researcher says

A researcher with the Vancouver Economic Commission says he is not overly concerned as numbers show Vancouver's downtown office vacancy rate has hit 10 per cent for the first time in almost 20 years.

According to real estate firm Avison Young, the first quarter of this year brought Vancouver's downtown office vacancy rate to 10.8 per cent, up from 9.6 per cent at the end of 2022.

The last time that the vacancy rate broke the 10 per cent threshold was in the last quarter of 2004.

Avison Young attributed the increase to more subleased properties being available as companies re-evaluate their office space requirements.

The firm says the greatest pressure to sublease space was on technology companies, which are increasingly keen to cut expenses and have more ability to allow staff to work remotely.

It adds that 59 per cent of Metro Vancouver's sublease space in the first quarter of 2023 was found downtown, which has seen a 34 per cent increase in sublease vacancies since the end of December 2022.

While Vancouver's downtown core saw an increase in the vacancy rate, suburban areas like Burnaby and Langley saw their vacancy rates decrease.

The Yaletown area, close to the downtown core, has the highest vacancy rate among all the Metro Vancouver subregions studied by Avison Young.

Expert still bullish on city's future

James Raymond, a senior manager of research at the Vancouver Economic Commission, said the vacancy rate going up in the downtown core wasn't surprising as more people are working remotely due to the pandemic.

According to Raymond, Vancouver's office vacancy rate remains one of the lowest in North America — with the latest numbers showing San Francisco recording a 29.4 per cent vacancy rate and Toronto sitting at 13.6 per cent.

"It's actually, [in] some way, become a bit of a relief after quite a really tight office vacancy rate for a long time," he told CBC News. "We were expecting it. It's not really a surprise, and we're still pretty bullish about Vancouver's long-term prospects."

Raymond says that the commission continues to receive interest from tech companies and representatives from other industries who want to move to Vancouver but acknowledged higher vacancy rates would have an impact on downtown businesses.

"We want downtowns to be busy and lively," he said. "Vancouver's lucky that we have a lot of residents who work and live downtown.

"We're more vibrant than some other places compared to, say, Calgary and even some other places like Los Angeles downtown."

The researcher said that the city would have to get creative about the types of developments occurring downtown in the years to come, pointing to the need for artist, industry, and child-care spaces.