First-quarter statistics show the office market remains largely in the doldrums, while warehouse space continues to be white-hot. Further Public Health Orders encouraging those that can work from home to do so, have once again doused any nascent demand for office space. Rising sublease space, however, shows signs of petering out with a relatively small increase of just 27,000 square feet during the quarter. Scarcity of warehouse space has become almost biblical in proportion to demand, with both leasing markets and ownership, primarily through strata condominiums, staying at levels well above historic norms. Of note, in select markets, warehouse rents are now at, and even above suburban office rents highlighting both the softness in office, and strength of industrial.
Compared to much of 2020, the region's office vacancy rate increased by a modest 20 basis points (bps)] during the quarter to register 7.0%, a level last seen in the first quarter of 2018. Most of this increase was due to the downtown market where the vacancy rate increased by 40 basis points to finish the quarter at 6.6%. The Gastown submarket in particular saw vacancies increase by 120 bps to finish the quarter at 8.1%. Conversely, Metro Vancouver's industrial market saw conditions once again become more restrictive for tenants with the overall availability rate decreasing by 30 bps to 1.5%. During the quarter, office and industrial rents also moved in opposite directions with region-wide office lease rates dropping by 1.5%, while industrial rents increased by $0.54 per square foot.