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Market Report

Vancouver Industrial Market Report

4Q 2023

Pre-leasing Remains Healthy, but Moderating
Demand Elsewhere Indicates Market Easing

Fundamentals softening, but expected to remain healthy. Vancouver’s industrial vacancy rate reached a record low of 0.4 per cent last year, which supported historic rent growth. Robust distribution and warehouse demand drove leasing activity, as the region is home to one of the largest deep-water ports in North America and greatly benefited from the rise in e-commerce activity. Supply constraints, due to limited development land as a result of the metro’s ocean and mountain boundaries, also aided fundamentals. In 2023, however, elevated interest rates are causing demand to moderate as households and businesses pull back on spending amid rising debt servicing costs. For the remainder of the year, vacancy is forecast to trend up as leasing momentum slows and a historic amount of new supply enters the market, which will likely cause rent growth to soften. The pace of increase, however, should hold above the metro’s long-term average as the vacancy rate is expected to remain sub-2 per cent.
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