Vancouver office vacancies forecast to climb: CBRE

New outlook report also suggests COVID could spur future demand for greater square footage per employee

Vancouver's downtown office vacancy rate is expected to grow in 2021 | Chung Chow

More real estate is expected to become available in what has been one of North America's tightest and most competitive markets for office space.

Vancouver’s office vacancy rate is expected to increase over the next year, after more than doubling from 2019 to 2020.

CBRE’s latest real estate outlook forecasts the region’s downtown vacancy rate will reach 8.4% in 2021, up from 5.8% in 2020, and 2.2% the year before.

More than 1.1 million square feet of new supply is also expected to hit the market this year.

“Canada’s largest cities have been disproportionately impacted [by COVID-19] as high population densities and dependency on mass transit created logistical challenges which reduced office occupancy,” the report states.

While higher office vacancy rates is expected to persist throughout the year, CBRE expects leasing activity will resume as vaccination rates climb, and business activity recovers.

The firm also projects that current allocations of square footage per employee could increase, as employers rethink space, health and safety requirements in the post-pandemic world.

In the meantime, the cost of premium downtown office space is expected to tick down by around 3% to $43.10 per square foot, after holding fairly steady from 2019 to 2020.