Second-quarter metrics show office and industrial markets across the region posted another strong quarter. More so for industrial than office, but in the context of tepid economic growth, and now widespread hybrid workplace practices, office performed admirably. The outlook for both is more of the same. Slow and steady for office, while industrial looks set to only register robust growth, supply of space notwithstanding. While higher interest rates had a material affect on the sale of both office and industrial properties, leasing activity to date, has showed little to no change.
Second-quarter statistics show Metro Vancouver's office and industrial markets maintained their position as two of North America's most restrictive markets (respectively). During the quarter, the Metro Vancouver office availability rate increased marginally to 7.5%, up slightly from the previous quarter (6.9%), but down from a year ago (8.2%). This, while the industrial availability rate stayed relatively steady at 2.5%. Metro Vancouver office vacancies finished the quarter at 4.9%, and industrial at 0.7% (neither showed much change during the quarter). This despite over half a million square feet of office space coming online, and almost 1.3 million square feet of warehouse space. Of note, and a degree of optimism for industrial occupiers, warehouse space under construction surged to 9.9 million square feet, compared to 4.3 million square feet a year ago. Office rents showed surprising strength during the quarter (mostly in the suburbs), rising 4.6% to average $33.90 per square foot (2.1% year-over-year), while warehouse rents continued their spectacular rise, increasing 5.9% to average $17.87 per square foot (12.2% year-over-year).