As Tech Grows- Spillover Demand Moves To The Suburbs
BC’s diversified business environment enjoyed plenty of spillovers from the extraordinary growth of 2017 in GDP, trade, and the labour market. Through uncertainty remains around the impact of rising interest rates and NAFTA negotiations, BC’s economic growth is expected to lead the country. A healthy labour market abundant with new and existing technology tenants, combined with large international occupiers have been the driving force behind demand for commercial space in the region.
The Metro Vancouver office market continued to tighten as it began entering the next phase of its growth cycle. Already hovering at record low levels, the overall vacancy rate dropped 90 bps to 6.4% from Q4 2017, as a result of constrained conditions in both the downtown and suburban markets. Absorption spiked to 703, 728 sq. ft., compared with 379.320 sq. ft. in Q1 2017. Occupancies from major transactions in 2017 accounted for 52.5% of absorption in this quarter. Upward momentum in the average net asking rates strengthened with a 5.6% year-over-year increase as demand continued to outpace supply. A record number of sales transactions occuring in the Investors Group Metro Vancouver portfolio (consisting of 8 office buildings) and Willingdon Park (consisting of 5 our of 7 office buildings) changed hands, indicating that demand for investment grade suburban office space is alive and well among both domestic and international buyers.