Vacancies for all asset classes in downtown Vancouver have dropped from 8.7% to 6.8% in the past 12 months and tech and media companies drive demand for space.
The figures, from real estate advisory firm Newmark Knight Frank Devencore, suggest that a historic low could be reached in the next 12 months and that is an opportunity for British Columbia’s third-largest city.
"Burnaby is taking the lead in positioning itself as an alternative urban centre to downtown Vancouver," said Jon Bishop, Executive Vice President and Managing Principal of the firm’s Vancouver office. "Anticipating a population growth of over one million people by 2041, the city has created a comprehensive Metrotown Downtown Plan that aims to establish Metrotown as the focal point for growth and development.”
Burnaby isn’t the only city challenging Vancouver’s appeal. Richmond and Surrey are also showing strong growth.
Not only is Class A space more readily available in Burnaby, Richmond and Surrey (between 10.4% and 17.9%) than Vancouver, rents are far lower too. While Vancouver landlords are charging average gross rents of $49.52 per square foot, in the ‘challenger-cities’ rents are between $27.14 and $35.05 psf.
Bishop says there will be some tough choices to make in the year ahead for the Vancouver market.
"Landlords will be limiting tenant inducements and expanding tenancies will have to consider either leasing non-contiguous space or locating some or all of their operations to the suburbs," he said.
More market update:
With commercial vacancy rates in Vancouver nearing a historic low, Burnaby is gearing up to benefit from space-hungry businesses.