Microsoft and Sony Pictures Imageworks’ offices above the former Nordstrom at CF Pacific Centre at 725 Granville St., Vancouver. (Kenneth Chan)
The last time downtown Vancouver’s leasable office vacancy rate was this high was 21 years ago, during the prolonged dot-com bubble burst.
According to a new market bulletin by commercial real estate firm CBRE, as of the end of the third quarter of 2025, the office vacancy rate in downtown Vancouver reached 12.6 per cent — a 0.7 per cent increase from 11.9 per cent in the second quarter of this year.
But with all things being relative, downtown Vancouver still has the lowest office vacancy rate among Canada’s major city centres — coming ahead of the downtowns of Ottawa (14.8 per cent), Halifax (14.9 per cent), Toronto (17 per cent), Winnipeg (18.3 per cent), Montreal (18.9 per cent), Edmonton (21.2 per cent), Calgary (30.3 per cent), London (30.6 per cent), and Waterloo (31.3 per cent).
The office vacancy rate of Vancouver’s city centre also still compares very positively to major downtowns in the United States.
Since the pandemic, there has been a “flight to quality,” with tenants leaving older, lower-calibre office properties in favour of newer, modern office spaces that are of a higher calibre and equipped with more amenities.
Notably, as previously reported by Daily Hive Urbanized, lululemon has leased the entirety of 300,000 sq. ft. of premium Class AAA office space above the former Nordstrom store at CF Pacific Centre, replacing Sony Pictures Imageworks’ global headquarters and Microsoft Canada, with Sony relocating to The Post and Microsoft expanding its existing presence at the new B6 office tower.
But according to CBRE, this flight to quality trend is now beginning to dissipate, with demand for premium Class AAA/A office spaces now experiencing a “transformation” due to “shifts in tenant requirements [that] are moderating the overall performance of this segment.”
“Vacancy rates for high-quality office space are stabilizing in response to these countervailing forces,” states CBRE.
With that said, the gap between newer, high-end office buildings and older ones is still obvious. Vacancies in older, lower-quality (Class B and Class C) buildings went up again this quarter — rising by 1.8 per cent to 17.2 per cent. In contrast, newer, top-tier (Class AAA and Class A) buildings stayed much fuller, with a vacancy rate of just 9.5 per cent.
Metro Vancouver’s suburban office market — defined as all other areas in the region outside of the downtown Vancouver peninsula — saw a slight office vacancy rate increase of 0.2 per cent, reaching 10.1 per cent.
Overall, Metro Vancouver’s office vacancy rate saw a 0.5 per increase to 11.4 per cent, compared to the second quarter.
Currently, there is 446,000 sq. ft. of new office space under construction, with about 29,000 sq. ft. of space being built in downtown Vancouver and the remainder elsewhere in the region. Out of this total under construction, 52 per cent is pre-leased.
In the third quarter of 2025, 166,000 sq. ft. of new office space was completed in Metro Vancouver’s suburban areas, with 55 per cent pre-leased.
CBRE’s update notes that four Canadian city centre office markets saw decreases in their vacancy rates in the third quarter.
Two of those markets, Calgary and Ottawa, saw their vacancy rates shrink due to office-to-residential conversion projects. It is noted that Calgary saw over 991,000 sq. ft. of office space removed from residential conversion projects, which brings the cumulative total of office-to-residential conversions to 6.8 million sq. ft. since 2021. As well, Calgary saw 2.6 million sq. ft. of office space demolished since 2021. Conversions and demolitions combined have shrunk Calgary’s office vacancy rate by two per cent.
Nationwide, the amount of office space under construction in the 10 metropolitan areas fell to 2.6 million sq. ft. in the third quarter. No new office projects began construction, with the office construction pipeline now at a 20-year low. Greater Toronto still accounts for most of active office development projects — about 79 per cent of all office space under construction.
The leasable office vacancy rate should not be confused for the actual occupancy and use of an office space, which still sees activity that is lower than the pre-pandemic period due to prolonged work-from-home and semi-remote work policies at many businesses.
There are continued major uncertainties with the office market, with not only continued work-from-home and semi-remote work impacts, but also from Canada’s structural economic challenges, government policies, and the emerging impact of new and improved artificial intelligence tools.
As for Metro Vancouver’s leasable industrial space market, more space reached completion over the quarter north of the Fraser River, pushing Metro Vancouver’s overall industrial vacancy rate rate up slightly to 5.3 per cent.
At the same time, the industrial space vacancy rate across the region actually dropped a bit to 3.8 per cent, mainly because of stronger leasing activity in large spaces over 50,000 sq. ft. — the number of those big listings fell from 55 to 48.
New industrial space construction continues to slow for the fourth straight quarter, even though 520,000 sq. ft. of new industrial space was completed in the third quarter of this year. What’s being built is already leased — 67 per cent of space under construction is now pre-committed, up from 56 per cent last quarter. If custom-built projects are taken out of the equation, pre-leasing still jumped from 24 per cent to 42 per cent.
Meanwhile, sublease space — warehouses or units being re-offered by existing tenants — fell by nearly 17 per cent, leaving about 1.7 million sq. ft. available, which makes up about 14 per cent of all available industrial space in Metro Vancouver.
