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CBRE Says Vancouver Commercial Real Estate is Punching Above its Weight
Friday, November 1, 2019
Market exceeded expectations this year, and CBRE forecasts record-low vacancies and surging rents will continue to define the city's success in 2020
CBRE's Jason Kiselbach cited Vancouver's abundance of skilled labour and affordability as factors attracting tech firms. The city's occupancy costs, including wages and rent, are 71% lower than Seattle's and 100% lower than San Francisco's.
Vancouver, BC, November 1, 2019--(T-Net)--CBRE announced in a news release this week that despite global instability, the Vancouver commercial real estate market has been punching above its weight.
Record-low office and industrial vacancy has led to steadily rising rents, and domestic and global capital is descending on the West Coast in pursuit of long-term growth opportunities.
"Safe to say that the Vancouver market has exceeded expectations in 2019," Jason Kiselbach, Senior Vice President and Managing Director for CBRE in British Columbia, said at this week's Market Outlook Breakfast, kicking off the Vancouver Real Estate Strategy & Leasing Conference.
There are many reasons for optimism heading into 2020. Vancouver's downtown office vacancy rate is the second-lowest in North America, dropping to 2.4% in the third quarter, and the amount of available industrial space across Metro Vancouver is at a near-record low of 2.5%.
New supply in both markets is being snapped up quickly and declining vacancy is causing rental rates to rise steadily.
"Rising rents might not be great news for tenants, but it makes new construction more viable in the face of rising costs. New supply is the key to alleviating space constraints and rising costs," said Kiselbach.
On the investment front, Vancouver commercial real estate returns rival those of other global cities. Investor hunger for Vancouver properties stems from robust population growth, a thriving tech sector and rapid expansion in logistics and distribution due to the continued rise of e-commerce.
"One factor in Vancouver's favour that might come as a surprise is that we are actually cost competitive," Kiselbach said. "Even with office rental rate increases, Vancouver is still cheap relative to other gateway marketlike Seattle and the Bay Area, where rents and wages combined are 71% and 101% higher respectively."
What lies ahead for Vancouver commercial real estate?
Kiselbach pointed to several trends to watch for in 2020 and beyond:
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
In Canada, CBRE Limited employs 2,200 people in 22 locations from coast to coast. Please visit our website at www.cbre.ca.
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