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Vancouver’s Commercial and Office Real Estate Update

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Amidst macroeconomic challenges, Vancouver was the most preferred market by investors in the fourth quarter of 2023, followed by Toronto and Ottawa

In the fourth quarter of 2023, Vancouver’s office sector saw a significant drop in value, down 36% from the previous year to $579 million. Office space availability increased slightly to 12.2%, showing stability. Around 608,769 ft2 of new office space became available, with 78% of it already leased. Notably, two new Class-A office buildings, The Post and B6, were added to downtown Vancouver. Additionally, construction is underway for nearly 4.1 million square feet of office space, with almost half of it already committed.

In 2023, Vancouver faced challenges in securing financing, leading to a 48% decrease in dollar volume, dropping to $8.4 billion compared to the previous year. 

Despite challenges, however, Vancouver remained the top choice for investors in this period, followed by Toronto and Ottawa. What’s more, some experts are predicting a Vancouver office space shortage.

Local experts warn of a potential shortage of high-quality office space in Vancouver’s class-AAA category due to developers’ reluctance to start new towers. Despite current high vacancy rates, a reversal is predicted in a few years as demand for premium office space may exceed supply sooner than expected. Developing a new class-AAA tower in Vancouver can take up to a decade, and securing traditional financing for such projects has become increasingly difficult due to rising costs.

Some commercial projects are being proposed, though.

PCI Developments is currently proposing a large-scale mixed-use project in Mount Pleasant, encompassing over 1.66 acres. The development aims to revitalize the area by preserving the heritage Dominion Steam Laundry building and introducing innovative industrial office spaces alongside street-level retail. Located at 4 West 3rd Avenue, 16 West 3rd Avenue, and 5 West 4th Avenue, the project aligns with the Mount Pleasant Industrial Area’s policy. If approved, it will feature a community hub and office spaces.

It will offer other amenities, like daycare facilities, retail spaces, food and beverage outlets, and a new public plaza. The proposal also aims to intensify traditional light industrial functions, preserve arts and cultural spaces, and introduce complementary amenities to support the area’s growing workforce and small businesses.

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This is in addition to another PCI/Translink collaboration for a mixed-use proposal at West Broadway and Arbutus, adjacent to the upcoming Arbutus Station. The proposed 30-storey building would include approximately 260 rental homes, with 20% designated as below-market rentals. It also features 7,600 square feet of retail space, along with 8,672 square feet allocated for community use by the Ohel Ya’akov Community Kollel. A new public plaza will enhance pedestrian connectivity and offer access to the Arbutus Greenway, with a designated crossing to the Arbutus Station. The development aims to encourage cycling and public transit, and aligns with the Broadway Plan’s objectives for sustainable, high-density development near transit, and will significantly increase rental housing in the Kitsilano area.

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