A slowing economy is stifling demand for office space in Metro Vancouver, driving the overall vacancy rate to 7.4 per cent in the region, according to a mid-year market report by real estate services firm Avison Young.
That marks an increase from 5.4 per cent a the end of last year, and five per cent in mid 2008, according to the survey which attributed the decrease to a number of factors, including downsizing, consolidation, and a delay in expansion plans.
"Deal velocity was minimal during the first six months of 2009 as firms continued to downsize, consolidate, delay expansion plans, and cut costs by subleasing some of their excess office space," said Darrell Hurst, Principal, Avison Young-Vancouver.
Related links: Avison Young Survey
"This pause in leasing demand and crisis of confidence, which began in the latter half of 2008 when the global credit crunch intensified, pushed up vacancy levels in nearly every submarket during the first half of 2009."
The survey measures vacancy, absorption and new construction trends in Vancouver, Burnaby, Richmond, Surrey New Westminster and Vancouver's North Shore.
It covers a total of 45.8 million square feet of office space.
With an office space inventory of 19.4 million square feet, Vancouver's downtown core has seen its vacancy rate double from 2.5% at year-end 2008 to 5.0% at mid-year 2009, the survey said.
The actual amount of space available in the downtown core is closer to 6.5% or 1.26 million square feet if the space availability factor (which refers to space that is being marketed but is not physically vacant) is taken into account.
Meanwhile, the overall suburban vacancy rate notched up to 9.1% from 7.7% at year-end 2008.
