2018 Kicks Off with Sharp Increase in Major Deals in Vancouver’s Suburban Office Market

Falling suburban office vacancy expected to drive investment throughout 2018

​Vancouver, BC – May 22, 2018 – In Vancouver’s increasingly hot office market, CBRE’s Canada Q1 2018 Quarterly Statistics Report shows that improving fundamentals in the city’s suburban market are driving investor confidence. Suburban office sales led the market by a significant margin in Q1 2018, with CBRE Vancouver’s National Investment Team reporting it closed on 14 suburban office buildings in the first three months of this year, compared to eight in all of 2017. In the same quarter, the suburban office market experienced a 150-basis point drop in vacancy rate to 8.1%, the lowest it’s been since Q2 2001, and an increase in rental rates for five of the city’s seven sub-markets.

Among the top suburban office deals transacted in Q1 2018: the remaining five of nine office buildings at Willingdon Park, totaling 488,811 square feet on 2.3 acres, as well as the Investors Group Metro Vancouver Portfolio, a collection of nine office buildings combined with industrial, totaling over 1 million square feet across 31 acres. Willingdon Park garnered significant attention from multiple local, national and foreign investors, and ultimately sold to an American investor. The Investors Group Metro Vancouver Portfolio was sold to a major Canadian investor, allowing the purchaser to achieve immediate scale of institutional quality assets in Metro Vancouver.

“We expect the rising investor demand trend in the suburbs to continue as falling vacancy rates will result in lease rate growth,” said Tony Quattrin, Vice Chairman of the National Investment Team at CBRE Vancouver. “Interest from domestic and foreign investors remains strong for the suburban office market, particularly along suburban transit stations, supporting continued strong values in these areas. In fact, investors in the suburban office market are seeing returns up to 40% higher than downtown Vancouver.”

As a result of government zoning for additional office development in the area, developers have dramatically increased the supply of new office space in the region, building speculatively as part of their suburban mixed-use developments. Over the past three years, there have been seven new office buildings added, representing 1.5 million square feet, of which 83% is already leased.

Downtown Vancouver remains the second tightest office market in North America, and companies are increasingly looking to the suburbs to host their operations. “There has been incredible demand for well located, new suburban office product and a notable flight to quality in the suburban market which is dominated with aging stock,” said Luke Gibson, VP of Office Properties for CBRE Vancouver. “Employers clearly see the value in locating themselves in the most desirable space in order to attract and retain top talent in a competitive environment.”

The report also found tenant demand for suburban office space now encompasses a wider breadth of industry types beyond tech. Tenants in the suburbs include a mixture of tech with government and traditional uses such as engineering and construction services actively seeking space in the suburban office market.
Nationwide, market fundamentals remained robust with demand outpacing new supply. The quarter closed with 2.1 million square feet of positive net absorption and only 716,650 square feet of new supply.

For a copy of the full report, CLICK HERE.

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.