Vancouver’s downtown office vacancy rate kicked off the year in suspended animation, remaining unchanged between the first quarter of 2025 and the quarter prior.
That’s according to a recent report from Cushman & Wakefield Inc., which determined the downtown office vacancy rate stood at 14 per cent during those periods.
This comes as tenants shifted around the market in a flight to quality, said Cushman research manager Svetlana Lebedeva.
She said high-class office space is outperforming other assets, although with a recent flood of supply and subleases, downtown vacancy remains higher than in the suburbs.
Lower than the downtown rate, the Â鶹´«Ã½Ó³»region’s vacancy rate for office buildings was 11.4 per cent in Q1 2025, and as low as 3.3 per cent on the North Shore and four per cent in Langley.
The region’s tenants continue to make lateral moves or chase top-tier office space, Lebedeva said.
“We see tenants relocating. A flight to quality is still ongoing, and it’s been ongoing for quite a few years,” she said, adding many tenants are moving to higher-quality office buildings, and new builds in particular.
However, inventory remains scarce in the upper echelons of the market.
“It’s interesting to note that there is basically no space, not even large blocks or full floors, of good high-quality space in higher buildings like AAA-class new builds. There’s basically zero, maybe one floor here and there,” Lebedeva said.
Still, about five towers were added to downtown inventory over the past two to three years, including BGO’s B6 and Oxford Properties Group’s The Stack.
New supply, together with recent sublease activity and a lack of new entrants, is pushing up downtown vacancy. (Cushman defines vacancy to include vacant sublease space.)
The result is a war of incentives between landlords.
“Landlords, in our observation, are trying to maintain high asking rates by offering tenants significant inducements. That’s what we see, and we see some deals being done,” said Lebedeva.
Though top-tier product remains scarce, tenants still have plenty of spaces to choose from and absorb.
“There’s still lots of sublease space ready for tenants to move in. They can move in next month. I think we have almost 90 full vacant floors in downtown Â鶹´«Ã½Ó³»available this quarter. That’s a lot. They are all over the place, not all of them are contiguous of course, but full floors, imagine that.”
Meanwhile, a big question mark is the conversion of office into hotel or condo.
“There could be more cases down the road with office buildings that can potentially be converted, although not every building can be converted,” Lebedeva said.
“We may see more buildings going residential or hotel.”
