Navigating Economic Shifts and Office Market Trends: Q1 2024 Overview

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In our Q1 snapshot we delve into critical economic events shaping the landscape in 2024 and analyze the latest trends in the Metro Vancouver office market.

Economic Overview

The Bank of Canada has maintained its key policy interest rate at 5% amidst stalling economic growth and inflation hovering near the upper end of the control range. Anticipation of rate cuts looms, with market predictions suggesting potential reductions later in the year. Global conflicts, such as the Ukraine-Russia conflict and the Israel-Palestinian conflict, continue to ripple through international markets, impacting commodity prices and supply chains. The upcoming U.S. presidential election adds further uncertainty, with potential ramifications for both the U.S. and Canadian economies. Despite these challenges, cautious monetary policies, and strategic planning offer opportunities for growth in 2024.

Office Market Overview

In the Downtown market, operating costs have seen slight increases across Class A, B, and C buildings. Availability rates have risen marginally, with negative absorption noted in the quarter. The Suburban market remains relatively healthy, though vacancy rates have seen a slight uptick. Burnaby and New Westminster have experienced increases in availability, while Richmond and Surrey have seen fluctuations. The Vancouver Periphery market has also witnessed a slight increase in availability rates, with negative absorption observed.

Key Statistics

  • Bank of Canada’s key policy interest rate: 5%
  • Market predictions: 96% chance of a 0.25% rate cut by June, 94% chance of a 0.50% cut by September
  • Downtown market availability rate: 16.4%
  • Suburban market availability rate: 8.4%
  • Vancouver Periphery market availability rate: 11.7%
  • Average additional rent for Class A Downtown buildings: $24.78 PSF
  • Average additional rent for Class B Downtown buildings: $21.66 PSF
  • Average additional rent for Class C Downtown buildings: $18.24 PSF

For more information and market data, the NAI Q1 2024 Office Market Report is available to read here.

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