Metro Vancouver Industrial Market
The Vancouver industrial market remains constrained but shows signs of stability. Net absorption remained positive for the third consecutive quarter, totalling 504,000 square feet, with Surrey and Richmond accounting for much of the activity. Vacancy remained flat for the second consecutive quarter at 4.5%, up 50 basis points year over year. Leasing activity has been highly active in the traditional core markets of Delta, Richmond, and Surrey, particularly with large-bay distribution sites.
On the supply side, 245,000 square feet of new industrial space was completed, while the development pipeline is expected to bring approximately 1.5 million square feet by year-end. Asking lease rates continue to decline due to several quarters of pent-up vacancies along with the steady stream of new supply as well as upcoming mid-to-large blocks of vacancies.
Two-thirds of construction activity is taking place South of the Fraser River with 2.1 million square feet of speculative and custom-build projects currently in progress. Notable developments include the second phase of Heppell’s Latimer Lake Logistics Park (382,147 square feet) and Berezan Group’s build-to-suit project in Cloverdale (432,709 square feet).
Metro Vancouver Retail Market
Despite the recent surge in leasing and investment activity, the Vancouver retail market remains tight. For the third consecutive quarter, vacancy remains at 2.6% reflecting ongoing demand. Absorption returned to positive territory after seven consecutive quarters of negative absorption.
The opening of Oakridge Place added 650,000 square feet of new retail product to Vancouver’s inventory. The multi-phase, master-planned development opened with several luxury brands, as well as new food hall.
La Maison Simons announced it will occupy 92,000 square feet in CF Pacific Centre at the intersection of Granville and West Georgia, joining Aritzia in backfilling the space that has been vacant for nearly three years following Nordstrom’s departure in June 2023.
On the investment front, Onni Group acquired the site of the former Hudson’s Bay Company site at 674 Granville Street via court ordered sale for a reported $112.5 million.
Metro Vancouver Office Market
Metro Vancouver’s office market remained relatively stable in the second quarter, with vacancy increasing by 40 basis points quarter over quarter. Market conditions continued to vary across submarkets, with some showing improved leasing activity while others recorded higher vacancy levels. Overall absorption was negative due to larger tenant departures and additional available space, contributing to the increase in vacancy. Sublease availability continued to decline and now accounts for 17% of the total available space.
New office supply remained limited, with no significant projects currently underway. Several projects are on hold, while others are being considered for alternative uses. Looking ahead, recent federal and provincial infrastructure initiatives are expected to support employment growth and strengthen demand for office space.
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