First-quarter statistics suggest Metro Vancouver's office and industrial markets are both beginning to moderate, albeit in different directions. Office demand appears to be solidifying, while industrial shows early signs of a tentative pause after a near record-run of robust growth. Like office markets across North America, Vancouver's office market has seen a material weakening in demand, as tech companies in particular look to downsize and consolidate where possible. Warehouse users by contrast almost universally need more space, but at the margin early signs suggest demand has begun to be more measured, in part because recent indicators show a slowing economy, but also the near doubling in real estate costs in the last leasing cycle. First quarter office leasing activity was also noteworthy for again recording an exceptionally sluggish three-month period, and the weakest since the depths of COVID registered in mid-2020.
At quarter-end, the Metro Vancouver office market saw availabilities decrease slightly to 8.5%, but up materially from year-ago levels. This, while the industrial availability rate increased, but by a very modest 40 basis points to register 2.3%. Office deliveries registered a notable 1.3 million square feet, an amount not seen since the fourth quarter of 2015, and one of the highest on record. By contrast, industrial completions totalled just 544,000 square feet. During the quarter office rents fell by $0.46 per square foot to average $33.76 per square foot, while warehouse rents increased slightly, to finish the quarter at $21.05 per square foot.