Vancouver's office and industrial markets again posted divergent results for the fourth quarter. Demand for industrial space remained very strong, while office demand was demonstratively more subdued with another sizeable increase in sublease space. Tech companies were the primary source of this additional sublease space. Fourth quarter office leasing activity was also noteworthy for being the weakest since the depths of COVID registered in mid-2020. Near-term office demand is expected to stay weak as tech companies shed space and the reality of a slowing economy puts more downward pressure on office usage. Industrial is also expected to feel the effects of a more sluggish economy, but the pullback is anticipated to be relatively mild relative to office.
Fourth-quarter statistics show Metro Vancouver's office and industrial markets continued to show divergent paths, with office weakening and industrial staying steady. At quarter-end, the Metro Vancouver office market saw availabilities increase to 8.5%, up from both the prior quarter and year-ago levels. This, while the industrial availability rate also increased, but by a very modest 20 basis points to register 2.3%. Office deliveries were relatively muted during the quarter adding just 117,000 square feet, however, over one million square feet is anticipated in early 2023. By contrast, industrial completions totalled a very robust 1.7 million square feet. During the quarter office rents registered no material change averaging $34.22 per square foot, while warehouse rents continued their sharp rise, increasing by $0.68 to average $19.26 per square foot.