Despite what the headlines may say, residential isn’t the only industry that’s seeing a significant spike in value. Earlier this month the Real Estate Board of Greater Vancouver (REBGV) released a report that commercial real estate sales reached nearly $13 billion in 2016. This marks a 47% increase compared to the $8.8 billion in sales the year before.
Short Land Supply
Cities in the Lower Mainland are seeing just as much demand as Vancouver’s downtown core. Surrounding municipalities like Richmond and Burnaby are becoming increasingly sought-after due to their close proximity to the city centre and infrastructure. The Vancouver Sun reported earlier this year that “Richmond’s office vacancy has been on a steady decline since cresting above 20% in 2012.” As of January 31st, 2017, this fell to 9.5%; down 12.6% in the first quarter of the year.
Vacancies are especially low in the industrial sector. “I’ve never seen vacancy as low as it is, and I don’t see it changing anytime soon,” said Lee Hester, Senior Vice President of Industrial Sales & Lasing at JLL. “Vacancy is declining in all areas of industrial, as spaces that are 2,000 to 25,000 square feet are in extremely high demand.”
Coined the ‘Silicon Valley of the North’, Vancouver is becoming well known as a burgeoning tech scene. With Microsoft, Hootsuite, and Slack all calling YVR home, office spaces have quickly become difficult to come by. This is also true for the retail sector, as six Metro Vancouver malls were named the top producing shopping centres in Canada. Both office and retail sales hit record numbers, reaching $3.6 billion in 2016, which is $2.5 billion more than the previous year.
Unlike the 15% foreign buyers tax on residential, commercial properties do not have a similar levy; however, the jury is still out on whether foreign ownership has anything to do with the sudden shortage of supply available. It’s thought that economic growth is mostly responsible for the sudden increase in demand.