According to a report from Colliers International, vacancy rates in Vancouver offices have hit their highest level since 2005, rising from 8.7 per cent in Q1 to 9.3 per cent in Q2. The report suggests that the rise in vacancies is due to an increase in inventory in areas such as Burnaby and Surrey as well as a general lack of demand for office space in traditional industries.

The Metro Vancouver Office Market Report also suggests that office space demand is currently being driven by a trend towards small, unique spaces of 5,000 square feet or less.

“The type of tenants currently in the market for office space are looking for a combination of value, unique space and a great location,” says Maury Dubuque, managing director for Colliers Vancouver. “Technology tenants tend to prefer office space within heritage buildings found in locations like Gastown, Railtown and Yaletown that offer a distinctive ‘retro’ feel, or, new modern buildings with large floor plates that are located close to amenities and accessible by rapid transit. This is why we’re seeing more traditional types of space, like that within the Downtown Core, suffer from modest demand and rising vacancy.”

As tenants seek new, smaller office spaces, Colliers projects that vacancy rates will continue to increase. The report predicts that rents in existing Class A and Class B buildings could decrease as this market sees the largest vacancy increases.