Fourth-quarter market statistics demonstrate the large and growing gulf between office and warehouse space markets. Demand for office remains anemic, while warehouse space only becomes more scarce. With employers still largely supporting employees working from home, and health officials encouraging those that can work remotely to do so, office leasing market are mostly characterized by consolidation, downsizing, and subleasing. Preleasing has all but disappeared. By contrast, industrial markets have never been more robust.
The region's office vacancy rate increased by just over a full percentage point [110 basis points (bps)] during the quarter to register 6.8%, a level not seen since the second quarter of 2018. Most of this increase was due to the downtown market where the vacancy rate increased by 1.1 percentage points to finish the quarter at 6.4%. By contrast, Metro Vancouver's industrial market saw conditions once again become more restrictive for tenants with the overall availability rate decreasing by 40 bps to 1.8%. During the quarter, rents also moved in opposite directions with region-wide office rates dropping by 2.7%, while industrial lease rates increased by $0.48 per square foot.