Office space MICROSOFT, LULULEMON LED DOWNTOWN OFFICE SPACE DEMAND IN 2022

Downtown vacancy climbs as new office space hits the market

BY TYLER ORTON

Don’t expect an abundance of topquality office space to last long in Vancouver’s downtown core.

Downtown office vacancy reached 8 per cent as of mid-year 2022, up one full percentage point compared with the first six months of 2021, according to a report from Avison Young (Canada) Inc.

But the real estate firm notes this trend is unfolding “due to significant amounts of new supply” being delivered to the market.

Nearly 570,00 square feet additional AAA space was made available by the end of 2021 and has been “steadily absorbed” into the market, according to the report.

Most notably, this has come from the openings of such towers as the Deloitte Summit on West Hastings Street and Bentall 4 on the corner of Dunsmuir and Burrard Streets.

“While there are still elevated levels of vacancy relative to pre-pandemic levels, the market is starting to stabilize,” the report stated, acknowledging that the hybrid model of work has reshaped demand for office space.

“Further increases in vacancy are likely but will be more attributable to delivery of new buildings on a vacant or largely vacant basis, rather than COVID-19.”

At the end of 2022’s third quarter, the city’s biggest office space acquirers were tech giant Microsoft Corp. and Vancouver-based fashion retailer Lululemon Athletica Inc.

Avison Young said Microsoft inked a deal for 65,000 square feet at 989 Granville Street and is “widely rumoured” to have acquired 405,000 square feet of space at the B6 building, which is expected to complete construction during the fourth quarter of 2023. The two deals would mean the American tech company secured 468,000 square feet during the first half of 2022 alone.

Lululemon is the only company that has even come close to keeping pace with Microsoft’s expansion. The retailer nabbed 130,000 square feet at Burrard Place and 107,000 square feet at 1380 Burrard Street for a total of 237,000 square feet leased in the first eight-plus months of 2022.

This comes even as Lululemon plans to open a new headquarters with nearly 600,000 square feet in the False Creek Flats area just outside downtown.

Despite office space becoming more abundant in recent months throughout downtown Vancouver, vacancy rates across the Metro Vancouver region shrunk from 8.4 per cent to 7.8 per cent when comparing the first six months of 2021 and 2022, respectively. 