Victoria has one of the smallest commercial real estate footprints among major Canadian cities, but it kicks far above its weight in the metrics that define a market giant.
With a 0.2% vacancy rate, B.C.’s capital city has the tightest industrial sector in the country and, at $16.02 per square foot, Canada’s highest average industrial lease rates.
Second-place Metro Vancouver, in comparison, had a 0.5% industrial vacancy rate in the third quarter and an average per-square-foot leases at $15.50, according to a recent national survey by Colliers Canada.
Across Canada, 1.5% of industrial space is vacant, and the average lease rate is $9.70 per square foot.
Noting that close to 300,000 square feet of new industrial space is under construction in Victoria, Colliers said it may not be enough.
“The demand for industrial space continues to outpace supply significantly,” its report noted.
In the office market, Victoria has a 7.3% vacancy rate and average office leases at $23.25 per square foot, trailing only Toronto and Vancouver in both categories.
The average office vacancy rate in Canada is now 15.7%, the highest since 1994, according to commercial agency CBRE.
In its first report on the Victoria office market, covering 2021’s third quarter, CBRE noted that the vacancy rate of Class A and AA space in Victoria has dropped to 4.6%, while lease costs have levelled out at $26.49 per square foot for the top-tier offices.
Currently, less than 250,000 square feet of new office space is under construction in Victoria. Most of that is aimed at completion by 2023, but 40% of the space has already been pre-leased, and most of the new buildings are in suburban Esquimalt and Langford.
In Victoria’s downtown, the largest office space underway is the 75,390 square feet in the mixed-use makeover of the old Times Colonist press building, which is scheduled to be completed late next year. About 63% of that office space has already been committed, according to developer David Fullbrook, CEO of Merchant House Capital.
By 2024, the new Telus Ocean tower downtown is expected to deliver 150,000 square feet of office space, and Jawl Properties Ltd. is planning to reconfigure the existing Capital 6 theatre site into nine-storey downtown tower with 105,000 square feet of offices, but neither project has received city approval. •