In its Real Estate Market Study published today, Newmark Devencore reported that the overall vacancy rate in Class “A” buildings in downtown Vancouver has dropped to 3.3%, and almost all of this available space is found in smaller blocks.
“The Class “A” market will remain a landlord’s market for the foreseeable future, with top-quality office spaces commanding top dollar,” said Jon Bishop, Vice-President and General Manager of Devencore Company Limited. “With vacancy rates in the downtown core returning to pre-recession levels, we project that rental rates will eclipse those achieved during market peak of 2008. For these conditions to change, new office supply will have to be built. And while there are a number of interesting projects in the planning stages, and two or three likely to commence this year, delivery is still a few years off.”
With the market tightening in downtown Vancouver, Newmark Devencore expects to see more tenants considering their options in the Burnaby, Surrey and Richmond submarkets, where there is a good deal more available space and where occupancy costs continue to be significantly lower.
Further, Greater Victoria should also see more activity, as vacancy levels are now tracking at 9%, which is higher than they’ve been in the last 10 years. As recently as 2008, vacancies were in the 2% - 3% range. “Over the past few months tenants have been able to capitalize on this greatly altered market dynamic, and strategic negotiations have allowed tenants to achieve improved leasing inducements and more favourable financial terms,” Mr. Bishop said.
Across the rest of the country, vacancy rates have continued to decline as the economy has strengthened. The overall vacancy rate in Class “A” and Class “B” buildings in Canada’s major cities fell from 7.1% to 6.8% over the last six months of 2010, even as the total inventory of Class “A” and Class “B” office space increased. Should the economic recovery continue on its current path, Newmark Devencore expects that office vacancy rates should continue to decline across most of the country in the months ahead, and rental rates in some cities will likely begin to rise.
About Newmark Devencore
Devencore is the Canadian partner of Newmark, one of the largest independent real estate service firms in the world. Newmark Devencore is Canada’s largest corporate real estate advisor and brokerage exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com
About Newmark
Newmark is one of the largest independent real estate service firms in the world. Headquartered in New York, Newmark and London-based partner Knight Frank operate from over 220 offices in established and emerging property markets on six continents. With a combined staff of 7,300 and revenues last year exceeding $861 million, this major force in real estate is meeting the local and global needs of owners, tenants, investors and developers worldwide. For further information, visit www.newmarkkf.com.