Metro Vancouver Industrial Market
The first quarter of 2025 saw significant sales and leasing activity setting a high watermark for the year. For the second consecutive quarter, Metro Vancouver experienced positive absorption following three consecutive quarters of significant negative absorption.
The regional vacancy rate went up ten basis points (bps) to 3.4% marking the 11th consecutive quarter of upward vacancy while the availability rate rose 50 bps to 5.7%. There are approximately 20 listings over 50,000 square feet that are currently tenanted or will soon vacate.
Several large transactions closed during the first quarter. Dream Industrial REIT acquired a 27-acre industrial waterfront site for $143 million while Prologis entered the Vancouver market through the share sale acquisition of the Tilbury Distribution Centre, a fully leased multi-tenant building in Delta at an undisclosed price.
There is currently 5.9 million square feet under construction throughout the region, and the new supply pipeline for the year looks promising. Significant completions include Heppel’s two-building project at Latimer Lake Logistics Park totalling 726,000 square feet and Beedie’s Fraser Mills Business Centre completed 167,000 square feet across two buildings while 40% pre-sold.
Metro Vancouver Retail Market
Canadian shopping centres are experiencing a massive transformation at the start of the year. The iconic Canadian department store, “The Hudson’s Bay Company” will close all but six of its locations throughout Canada posing challenging times ahead for regional mall landlords who have long relied on anchor tenants like Hudson’s Bay to drive traffic and revenue.
For Vancouver and its region, Hudson’s Bay’s overall lease footprint totals approximately one million square feet across six suburban shopping centres and the downtown flagship location. Proportional GLA for each shopping centre ranges between 10% to 30%. In the longer term, this shift may unlock new possibilities for redevelopment or expansion by alternative tenants, including experiential retailers, mixed-use concepts, or international brands seeking entry into the Canadian market.
On the investment front, local investor Shato Holdings acquired Willowbrook Park Shopping Centre for $137 million, a grocery-anchored shopping centre in Langley situated near a future rapid transit line. This grocery-anchored shopping centre is strategically positioned near a proposed future rapid transit line, which is expected to enhance accessibility and increase long-term value.
Metro Vancouver Office Market
The vacancy rate in Vancouver’s office market dropped slightly by 30 basis points, showing some improvement in demand. Although the market shows signs of stabilization, it remains cautious, as some developers are scaling down on their office projects. For instance, Bonnis Properties recently revised its plans for a 17-storey office building on Granville Street and is now proposing two mixed-use towers with rental units and a hotel. Additionally, Rize Alliance has called off its 306 Terminal Avenue project. These moves reflect the changing market conditions and suggest that developers are adjusting their strategies.
Despite developers pulling back on some projects, leasing activity remains strong in higher-quality office buildings, with notable deals indicating continued demand for premium office space. A prime example is Nicola Wealth’s recent 38,000-square-foot lease at 1477 West Broadway, which is set to be delivered in late 2025.
The increasing demand for quality office space coupled with reduced new supply projects point to a market that is adapting to new needs and shifting economic factors.
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