DOWNTOWN ECONOMIC SNAPSHOT
With access to new real estate data from CoStar, Downtown Van now has the ability to analyze the commercial real estate market of our BIA catchment more accurately. For instance, the office vacancy of the downtown Vancouver market, which includes areas outside of Downtown Van’s catchment, ended Q2 2023 at 12.6%. However, when examining the office market of properties only within the Downtown Van catchment, office vacancy ended Q2 at 8.3%.
Sublet vacancy has been an area of particular interest for the Vancouver office market. Rising sublet vacancy over the past few years has indicated that firms are rethinking their office needs because of the shift to less in-office work. When looking at the downtown Vancouver office market, sublet vacancy ended Q2 2023 at 3.65%. But again, when analyzing just the Downtown Van catchment, Q2 sublet vacancy is lower, at 1.55%. Sublet space made up 22.9% of space available within the Downtown Van district. Between Q1 and Q2 2023, total office vacancy increased by only .06% in the Downtown Van district. However, total office space availability rose by 20.3%. Also, Q2 saw a slight negative net absorption of -1,494 SF in the Downtown Van district.
Visitor recovery to downtown retail corridors continues to be steady. Despite a slight drop in month-over-month recovery to 2019 levels, August visits still showed an increase in visits since this time last year. As the summer comes to an end, downtown will likely see a change in visits. Typically, around this time of year, downtown sees fewer recreational visits. However, downtown should expect an increase in office and work-related visits as firms are increasingly calling their employees back for more in-office work.
Beyond existing Downtown Van offices gradually bringing employees back to their spaces, some key new occupants are making their way downtown. Both The Stack and The Post buildings were completed in late 2022. Now, we are beginning to see their occupants move in. The Stack has already had several key tenants occupy their spaces. Canaccord Genuity and Fluor Engineering are the most notable with both occupying over 80,000 SF of space each. Looking ahead, five tenants taking up a total of 269,187 SF plan to occupy their space in The Stack beginning in October. At The Post, Amazon has begun moving into the South Tower. It is expected that the South Tower will be fully occupied by Q1 2024. Both The Stack and The Post are important milestones in downtown Vancouver’s office market, representing a new standard in Canadian workplaces and bringing thousands of people to the downtown core every day.
Downtown saw a drop in year-over-year sales growth between July and August. After a period of sales growth being skewed by early 2022 pandemic restrictions, restaurant sales have consistently seen negative growth. While retail sales have still seen growth, there have been weeks when growth has been below the inflation rate, indicating an effective decrease. Through 2023, the average transaction size of retail sales downtown has remained below 2022. This indicates a potential shift by the consumer toward purchasing cheaper options. Travel and Entertainment sales have faired better than retail and restaurant sales during the summer months, leading the way in sales growth from June through August. Yet, with the peak travel season winding down, growth trends in this area may shift.
