Approximately two million square feet of suburban office space is sitting vacant, representing more than two-thirds of all the vacant offices in Metro Vancouver, according to a report from Avison Young.
The worst hit area is Richmond, where 785,628 square feet of space is empty, including nearly 70,000 square feet of sublease space that has gone dark in the past year. In all, 23.3 per cent of Richmond office space is unused and only 10,124 square feet has been leased up in the past year, the Avison Young survey found. And this represents a minor recovery, since Richmond's vacancy rate had been 24.6 per cent a year ago. Nearly one-third of all Class C office space in Richmond is vacant. "With several significant tenancies in the market downsizing or leaving the market, it is expected that [Richmond] office vacancy rate will rise in 2012," Avison Young warns, noting that tenants can expect "significant inducements and incentives" to close deals this year.
Surrey is also dealing with an apparent overhang of office space after its vacancy rate recently jumped to 8.8 per cent, the highest level in nearly seven years. In the past year the city that claims to be the fastest growing in B.C. saw negative takeup on office space as tenants walked away from 47,000 square feet. Vacancy rates in Class A and B properties have tripled, with Class B space posting the largest amount of sublease space - more than 35,000 square feet - in 12 years. Avison Young notes that Surrey sublease space could more than double this year when, as expected, 51,000 square feet is vacated at Surrey's Central City.
Both New Westminster and Burnaby are also posting double-digit office vacancies, Avison Young reports, with 966,000 square feet of empty space in Burnaby alone.
The suburban slowdown is in contrast to downtown Vancouver, which is seeing the high lease up of office space in five years. The downtown vacancy rate has plunged to 3.9 per cent, down from 5 per cent a year earlier. At least three new office towers will break ground this year in the core, all of which will come to market by 2015. Until then, the downtown is expected to remain the tightest office market in the Metro region.
