Downtown Vancouver could face office space shortage by 2029

Downtown Vancouver's office real estate market could swing from today's surplus to a shortage by the end of the decade if no new office towers are built, according to commercial real estate firm Avison Young.

The city's premium class AAA and class A office vacancy rate currently sits at 12.9 percent—roughly two million square feet of available space. But that rate could shrink rapidly as businesses continue leasing higher-quality space and the development pipeline for new office projects has dried up.

Using the market's average annual absorption over the past decade of roughly 330,000 square feet of leased space per year, Avison Young forecasts vacancy would fall from today's 12.9 percent to about 6.2 percent by 2029. Even under a much slower leasing scenario where demand reaches only half the historical average, vacancy would still decline to about 10 percent.

If leasing strengthens to 150 percent of the historical average, however, vacancy would plunge to just 2.3 percent by 2029—returning to pre-pandemic tightness. That scenario would create an exceptionally constrained market where businesses have few options and landlords gain significant pricing power.

The vacancy rate range considered healthy and balanced is typically between 4 and 8 percent. Avison Young says the forecast reflects continued "flight-to-quality," a trend where companies favour newer, amenity-rich office buildings over older properties. While Downtown Vancouver has seen several major office towers completed over the past five years, many already secured tenants despite softer market conditions, suggesting demand for premium office space has remained resilient.