Burnaby's office space vacancy has plunged to its lowest rate in a decade.
“It's a good news story for Burnaby,” according to Glenn Gardner, a principal with Avison Young, a real estate company that publishes a semi-annual Metro Vancouver Office Market Report.
“It definitely shows that the market is healthy and it shows that the city of Burnaby is a place where tenants want to bring their businesses and service both their clients and their employees.”
By mid-2018, seven per cent of Burnaby’s office space was vacant, down from 13 per cent a year ago. Gardner said this shows the city is an attractive home for businesses new and old.
Located between the Fraser Valley and Vancouver, “Burnaby can be seen as kind of the hub,” he said. With a major highway and two rapid transit lines, he said it’s not hard to see what makes Burnaby attractive to companies looking for cheaper rents and operating costs than downtown Vancouver.
As the demand for offices in Burnaby increases, Gardner said the supply isn’t keeping up.
While many new towers have been completed with new lease space in recent years, those offices have been quickly absorbed by tenants.
While more and more new highrises are erected in Burnaby’s city centres, developers are more concentrated on creating strata apartments, he said.
“The economics of building and selling condos works out better for developers than building and [leasing] office space,” Gardner said.
As the office vacancy rate continues to drop and rents increase in turn, that equation is expected to change, he said. Gardener said he anticipates seeing more emphasis put on creating new office space in Burnaby as developers react to these new figures.
But a new office tower can’t be built in a day.
“The market is likely to remain tight for the next 24 to 36 months as many spaces considered vacant at mid-year 2018 have offers outstanding and even options that are located a distance from SkyTrain stations are becoming few and far between,” the report states.
The lease market is considered balanced when the vacancy rate hovers somewhere between eight and 10 per cent, according to Gardner.