The region's office market is seeing balanced conditions for the first time in years
Vancouver’s commercial real estate market, particularly its office segment, is well-positioned to capitalize on the economic recovery anticipated to take place during the second half of 2021, according to Avison Young.
While the unprecedented crisis brought about by COVID-19 proved devastating to almost all asset classes, the pandemic had one positive impact on Vancouver: providing the space the regional office market needed “to approach a balanced market for the first time since 2016,” Avison Young said.
The trends were especially apparent in the downtown core, which saw “small- to mid-sized pockets of vacancy” in mostly class B/C properties.
“Similar trends emerged throughout Metro Vancouver with inner suburbs registering minimal increases in vacancy year-over-year and slight negative annual absorption in mostly class B/C properties while the region’s outer suburban markets recorded comparatively strong levels of annual absorption and historically tight vacancy rates in 2020,” Avison Young reported.
The city’s commercial vacancy grew from 4.4% during year-end 2019 to 7.5% by year-end 2020. However, regional vacancy remained comparatively tight and was still less than the record 8% established at year-end 2017.
“While regional vacancy is expected to rise slightly in 2021, a balanced market is still expected,” Avison Young predicted, citing the federal government’s pledge to provide COVID-19 inoculations to most Canadians by September 2021.
“Renewed optimism accompanied by a widely forecasted resumption in economic activity is anticipated to accelerate a return to office by workers and stimulate real estate decision-makers to action,” Avison Young said.
“A reversal of the impacts of pandemic-related policies and precautions is anticipated to take root in the second half of the year with a corresponding improvement in metrics such as vacancy and absorption.”