Office vacancy in New Westminster falls to ‘all-time low’: report
Chris Campbell
Western Investor
Report blames a lack of supply
The Save-On-Foods at the Brewery District is one of three New Westminster locations of the grocery chain; all the stores have been reduced to 50% capacity in the face of the Omicron wave.Julie MacLellan
A new report on office vacancies in Metro Vancouver says that New Westminster has the lowest vacancy rate in the region due to a lack of supply that is “hindering activity.”
The report by Avison Young says office vacancy in the city “fell to an all-time low” of 4.3% at year-end 2021 from 5.4% a year ago. By contrast, Burnaby has a rate of 7% while Richmond sits at more than 10%.
“Avison Young has tracked the market since 1998,” says the report. “Vacancy has been steadily tightening since year-end 2017 with leasing velocity remaining stable during that time – despite the arrival of COVID-19 in early 2020 – due to the completion of several significant lease deals that saw tenants occupying improved space. A lack of new supply has also contributed to vacancy reaching record lows in 2021. Vacant sublease space is not available; however, sublease opportunities are possible in spaces that remain partially occupied.”
There was no vacant space in class C properties at year-end 2021 and vacancy in class A buildings was at a “miniscule” 2.5%, the report said.
“Annual absorption of 18,623 sf in 2021 marked the fifth year of positive absorption recorded in New Westminster after three years of historically strong levels of leasing activity,” said the report. “Despite a slow start in the first half of 2021, tenants subsequently occupied a majority of office space in the back half of the year.”
Video game developer Offworld Industries occupied 14,500 sf at 713 Columbia Street and was one of the primary drivers of positive absorption in New Westminster in 2021.
“New office construction in New Westminster is currently limited to Wesgroup’s Brewery District,” the report said.
“Rental rates were relatively flat in 2021 despite tightening vacancy and limited options for tenants. Lingering uncertainty around COVID-19 along with a lack of availability will likely hinder leasing activity into 2022, which may work to offset the upward pressure on rates that would typically emerge when vacancy is at a record low and the delivery of new office supply is more than 18 months out. Vacancy is forecasted to tighten further in 2022.”
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