Vancouver’s office market appears to be facing an uncertain summer as the cloud of a global trade dispute with the U.S. creates caution in clients, according to one expert.
“With geopolitical tensions, it’s not certain if it’s going to cause vacancy to go up during this summer or whether it’s probably going to hang out where it currently is for a little while,” Susan Thompson, associate director of research at Colliers Canada, told Western Investor in a May 22 interview.
“In the office sector, we are probably not going to see a new downtown office tower start announced for quite some time now. They need a significant amount of pre-leasing in order to go ahead with one of those. There is not much activity happening in the market.”
But the office market in Vancouver’s metro area showed signs of life in the first quarter, according to an April 7 report from Colliers. More companies moved into office space than left, taking up 198,650 square feet. And the vacancy rate went down for the first time since 2022 to land at 9.4 per cent.
The report attributed this improvement to a large amount of downtown sublease space being rented or removed from the market.
But many development projects with large office components have been put on hold or postponed, owing to lack of demand and low financial viability, according to the report. The first quarter of 2025 recorded the lowest new supply delivered in a quarter since Q3 2020, coming in around 31,000 square feet.
Construction costs have been steadily rising and the impact of the current trade war with the U.S. could drive input costs up further and faster, said the report.
On the flip side, the current office market scenario brings opportunity for tenants who are wanting to make a change, starting up or relocating, according to Thompson.
“There is more ability and room to negotiate on rents or potentially inducements, such as tenant improvement allowances or free rent periods,” said Thompson. “So there is quite a bit of room to negotiate on that front which could be quite advantageous for some tenants.”
