After a strong second quarter, investment activity in Vancouver eased for most sectors in Q3, according to the latest insights from Altus Group. Overall, the Vancouver market recorded $7.2 billion in dollar volume transacted year-to-date, an increase of 21 per cent from a year ago; however, investment activity slumped in the third quarter with only 1.6 billion in dollar volume transacted.
Vancouver’s multifamily sector recorded $967 million in dollar volume transacted, marking a 75 per cent year-over-year increase. Long-term outlook for the sector has remained positive, as strong population growth continues to sustain rental demand and outpace available supply. Moreover, as inflation has returned to the two-percent target, the Bank of Canada is forecasted to continue cutting interest rates. Although these cuts have not translated into any significant uptick in multifamily investment activity, investment volumes are expected to increase in response to more favourable financing conditions in 2025.
The industrial sector reported nearly $1.6 billion in dollar volume transacted, a decrease of 9 per cent year-to-date. Despite the slowdown in investment activity, Altus Group predicts the long-term outlook for the industrial sector will remain positive as Vancouver continues to be a vital trade hub for Canada.
Meanwhile, the city continues to grapple with challenges associated with the limited supply of land (residential land and ICI land), which has resulted in extremely low availability rates, increased land prices and construction costs, and higher development cost charges. The land sector posted $3.3 billion in dollar volume transacted—a 24 per cent increase from last year. However, investment activity in the third quarter waned, with only $855 million in dollar volume transacted, down 51 per cent from Q2. The ICI land sector recorded $1.8 billion in dollar volume transacted, marking a 45 per cent increase year-over year, while the residential land sector was up just five per cent.
The office sector posted $566 million in dollar volume, marking a 14 per cent increase over last year’s transactions. Altus group noted that several high-profile office buildings sold in Q2, contributing to an unanticipated boost in the office sector’s year-to-date investment volume. As the “flight-to-quality” trend persists, leasing activity continues to skew towards premium Class-A office buildings, which has increased competition across the Class-A market while outdated Class-B and -C buildings are at risk of functional obsolescence.
The retail sector reported $851 million in dollar volume transacted, a 57 per cent increase over last year. Leading the way was food-anchored retail strips, which continued to be preferred for their low-risk, stability as consumers focused their spending on essential goods and services. Vancouver’s retail sector remained resilient with several shopping centre redevelopments and mixed-use projects slated for completion in the neat future.
For the full report from Altus Group, click here: Vancouver Commercial Real Estate Market Update – Q3 2024
