Downtown Vancouver Office Vacancies Reach Post-Pandemic High as Major Sales Boost Market Outlook
Vancouver's downtown office market presents a complex picture as vacancy rates continue to climb while significant property transactions demonstrate enduring investor confidence in the city's commercial real estate landscape.
Vacancy Rates Hit Notable Levels
Office vacancy rates in downtown Vancouver increased during the final quarter of 2025, reaching 12.8 percent. This represents another post-COVID high for the market, with the last comparable vacancy levels occurring in the early 2000s following the dot-com crash when rates approached 14 percent.
Despite this upward trend, Vancouver's vacancy rate remains lower than other major Canadian cities. Toronto, for instance, currently experiences an 18 percent vacancy rate, though that market is now seeing increased occupancy due to return-to-office mandates from large corporations and government entities.
Market Dynamics and Tenant Behavior
According to Jason Kiselbach, Vancouver managing director at commercial real estate firm CBRE, Vancouver experienced an earlier resurgence in office demand following pandemic restrictions due to less stringent lockdown mandates compared to other regions.
"The most recent wave of activity in Toronto is on the heels of return-to-office mandates from several industries led by the Ontario government and banking sectors," Kiselbach explained. "These industries represent the largest office footprints and therefore have the most significant impact on vacancy. While Vancouver tenants returned to the office earlier, they did not come back in the same coordinated fashion."
Small-Tenant Market Strength
Paul Richter, director of market analytics for Western Canada at the CoStar Group, noted that Vancouver functions primarily as a small-tenant market where demand for smaller office spaces has remained robust.
"Landlords are going the extra mile to carve up larger floor plates and build out turnkey offices," Richter observed. "These are proving quite popular with smaller tenants looking to avoid the logistics and timelines of space design and build-out."
Significant Property Transactions
Despite rising vacancies, several major office building sales during the past six months have introduced new ownership to Vancouver's downtown core, signaling continued confidence in the market's long-term value.
Notable transactions include:
- QuadReal Property Group's sale of The Post building to Spain's Pontegradea Group for over $1.1 billion in November
- Toronto-based KingSett's acquisition of twin office buildings at 700 and 750 West Pender Street from Cadillac Fairview for $125 million
- Reports that Oceanic Plaza on West Hastings Street, owned by Oxford Properties and CPP Investments, is under contract to be sold to real estate management firm BGO for over $240 million
These substantial transactions demonstrate that buyers and sellers continue to find common ground on property valuations, suggesting underlying confidence in Vancouver's commercial real estate market despite current vacancy challenges.
Comparative Market Context
While Vancouver's office vacancy rate has increased, market experts emphasize that the city's commercial property owners maintain a bullish outlook. The recent sales activity indicates that investors view current conditions as presenting opportunities rather than signaling long-term decline.
The convergence of rising vacancies with significant property transactions creates a nuanced market environment where traditional indicators may not fully capture investor sentiment and future expectations for Vancouver's downtown commercial landscape.
