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Commercial real estate (CRE) in Canada has been defying gravity since the onset of the pandemic, with Vancouver having one of the most resilient CRE markets in the country. Demand for downtown CRE in Vancouver is picking up pace, proving once again that full Canadian CRE recovery is on the horizon.
Kaseya, a Miami-based IT company, has expanded its Canadian presence to meet the rising demand for its remote management software solutions. Kaseya leased 10,000 sq. ft. of office space in downtown Vancouver and plans to hire 75 more workers by the end of 2021.
Companies adopting remote work at the start of the pandemic have led to an increase in downtown Vancouver’s office vacancy rate, but the office space has been shrinking lately.
Not many workers are returning to the office, and fewer consumers are rushing to retailers, but CRE activity in Vancouver is still picking up.
According to Avison Young, Vancouver’s foot traffic in September 2021 is 67.5% lower than it was in March 2020. That’s still the fifth-lowest drop among all the urban cities in Canada that the CRE company measured.
Despite a drop in foot traffic, demand for downtown CRE has been on the rise since January 2021. According to Colliers International Canada, 62% of the office space demand comes from tech companies, primarily those with more than 30 employees.
“There’s going to be announcements in the next couple of months that will be some of the largest deals in Vancouver and quite some time,” said Colin Scarlett, an executive vice-president at Colliers Canada.
According to the BC Real Estate Association (BCREA), Metro Vancouver’s CRE sector is on the road to recovery. The BCREA Commercial Leading Indicator (CLI) has been rising for four consecutive quarters, coming up at 155 in the Q3 of 2021, which marks a 25% increase from the same period in 2020.
Still, the BCREA reports that the latest data doesn’t reflect reality, warning that the COVID-19 is skewing the Metro CRE outlook.
The growing CLI typically indicates a higher demand for office and retail space, but fewer office workers and a drop in foot traffic paint a different picture.
Due to the COVID-19’s looming fourth wave, office workers are still working from home, while consumers are increasingly relying on online shopping.
Even so, the data looks promising, showing a 5% rise in manufacturing sales, a 4.8% rise in wholesale trade, and the all-time high unit prices of commercial REITs (Real Estate Investment Trusts).
Office employment is higher than it has even been as well, thanks to CRE sectors in the province creating about 13,800 more jobs in the Q2 of 2021.
Despite fewer workers in the office and less street shopping due to the pandemic, Vancouver’s CRE market keeps going strong. Vancouver is one of Canada’s most resilient CRE markets; it’s a brilliant space for CRE investors and developers looking for profitable investment opportunities.