Vancouver commercial real estate market update – Q4 2024

Vancouver market was resilient in 2024 with investment volume up 18% year-over-year

Vancouver recorded $10 billion in dollar volume transacted in 2024, reflecting an 18% increase year-over-year. This increase, mirroring trends across Canada, was primarily driven by a frenzy of deals transacted in the second quarter as investors hurried to close deals ahead of the announced capital gains tax increase on June 25th. The subsequent third quarter saw a decline in investment volume as deals had been brought forward into the second quarter, with activity stabilizing by year’s end. Despite this volatility and persistent challenges from unfavourable financing conditions and the continued bid-ask gap between buyers and sellers, Vancouver’s overall 2024 investment volume outperformed 2023 levels. Moreover, Vancouver maintained its appeal, securing second place behind Toronto in Altus Group’s Canadian CRE Investment Trends Survey (ITS) – Q4 2024 as a preferred market by investors.

Figure 1 - Property transactions – All sectors by year

Economic uncertainty dampened investor confidence in Vancouver’s industrial sector, leading to a decline in transaction volume of $1.9 billion, a 28% drop year-over-year. This decline coincided with a significant market shift, as new supply surpassed demand for the first time in recent years, despite Vancouver’s historically constrained industrial market. According to Altus Group’s latest Canadian industrial market update (Q4 2024), Vancouver’s industrial availability rate increased by 220 basis points year-over-year to 5.5%, the highest availability rate observed since 2015. Vancouver, alongside Toronto, remained a major industrial construction hub, with fourth-quarter completions reaching nearly 1.5 million square feet, with 74% of the space available for lease. Moreover, three million square feet of industrial space remained under construction, with half of the space pre-leased. While the fourth quarter achieved its first positive absorption for the year, it is anticipated that softening economic conditions and ongoing U.S.-Canada trade tensions may swing absorption back into negative territory in future periods.

The land sector posted nearly $4.7 billion in dollar volume transacted, a 35% increase year-over-year. Specifically, the ICI land sector recorded $2.4 billion in dollar volume transacted, a 58% increase year-over-year. While the residential land sector recorded $2.3 billion in dollar volume transacted, a 17% increase year-over-year. Although investment volumes showed year-over-year growth, the pace of land sales has softened compared to historical averages. This moderation was largely attributed to a confluence of economic factors that have created challenges for developers. Primarily, elevated interest rates have significantly increased borrowing costs, coupled with high construction costs, skilled labour shortages, and burgeoning development fees have resulted in a more cautious approach to land acquisitions.

The multi-family sector recorded $1.1 billion in dollar volume transacted, marking a 43% increase year-over-year. This increase in investment activity was primarily driven by strong population growth and tight market conditions. While the rental supply saw a moderate increase, this was largely attributed to a record-high inventory of condominiums and a concurrent decline in condominium sales. In response to these market dynamics, developers began strategically shifting their focus towards purpose-built rental properties, recognizing this segment's strong underlying long-term fundamentals. Furthermore, the stabilization of investment volumes observed over the last four quarters indicated a period of relative market equilibrium, characterized by an absence of significant fluctuations. This period of stability suggests investor confidence in the long-term viability of the multi-family sector, despite other market variations.

Vancouver’s office market continued to present a complex picture. The office sector recorded $1.3 billion in dollar volume, a 123% increase year-over-year, as falling interest rates renewed investor confidence and spurred sales primarily for Class-A office space. According to Altus Group’s Canadian office market update – Q4 2024, Vancouver’s office availability rate has flattened at an elevated rate of 13.2%, unchanged from the previous quarter and the highest recorded rate in two decades. However, a strong “flight-to-quality” trend was evident, as Class-A buildings experienced six consecutive quarters of positive absorption and steadily declining availability. This suggested securing premium office space would become increasingly challenging, especially as the development pipeline for such buildings shrank. On the construction front, activity was limited in the fourth quarter, with only one fully leased office completion, the Marine Landing – Building A, a mixed-use industrial and office building totaling 58,640 square feet of office space. In addition, 2.1 million square feet of office space were under construction in the fourth quarter, with 28% of the space available for lease.

Vancouver’s retail sector was muted, with $996 million in dollar volume transacted, a 3% increase year-over-year. While investors sought out opportunities for retail space, this demand was tempered by persistent limitations stemming from a shrinking inventory, delays within the construction pipeline, and monetary uncertainty. According to Altus Group’s most recent Canadian Investment Trends Survey – Q4 2024, Vancouver’s first-ranked property type was food-anchored retail strips, as investors sought stability and low-risk opportunities. This preference reflected the enduring consumer focus on essential goods and services, which made these properties a reliable asset class. Beyond transactional activity, the market witnessed significant redevelopment and intensification efforts, signaling a long-term commitment to enhancing the city’s retail landscape. Several key projects, including The Shops at North Harbour, Oakridge Park, CF Richmond Centre, and The Amazing Brentwood, are underway or slated for future completion. These projects aim to modernize retail experiences, diversify offerings, and cater to the evolving needs of Vancouver’s growing population, further solidifying the sector’s long-term potential.

Figure 2 - Property transactions by asset class YTD (Q4 2023 vs. Q4 2024)

Notable Q4 2024 transactions

The following are the notable transactions for the Q4 2024 Vancouver commercial real estate market update:

1891 & 1974 164th Street, Surrey – ICI Land

In the fourth quarter of 2024, Costco Wholesale Canada Ltd. acquired this 32.5-acre site in South Surrey for $90.2 million resulting in a price per acre of $2.7 million. This transaction suggests a potential new Costco location, marking the retailer’s second store in the City of Surrey. A development application was submitted by WSP Canada Inc. in 2022, proposing rezoning from One-Acre Residential Zone (RA) to Commercial Development Zone (CD) and subdivision from two lots into four lots. The development plan includes a large format commercial store and an associated gas station, with one lot to be City-Owned riparian protection lot and one lot to stay as a remnant RA-zoned lot with future development potential.

1630 Parkway Boulevard & 3251 Plateau Boulevard, Coquitlam (Westwood Plateau Golf Country Club) – ICI Land

In October, JK World Group (JKWG) acquired the 266-acre Westwood Plateau Golf and Country Club in Coquitlam for $17.6 million. The golf club has since been rebranded as The GreenTee Country Club Westwood Plateau and features an 18-hole Golf Course, a 9-hole Golf Course, and a 35,000 sq. ft clubhouse. JK World Group is a holding company operating a luxurious lifestyle athletic social club in Metro Vancouver. Its golf portfolio includes the GreenTee Country Club Langley (formerly Pagoda Ridge, acquired in November 2021), Greentee Country Club Tobiano (formerly Tobiano Golf Course, acquired in February 2025), and multiple golf shops across the Lower Mainland and Toronto.

2226 West 8th Avenue & 2415 & 2421 Yew Street, Vancouver - Residential Land

In mid-December, real estate developer Townline acquired this 0.5-acre development site within the Broadway Plan for $25.5 million, representing a price per square foot of site area of $1,121. The property was improved with a three-storey apartment building and two single-family homes. A rezoning application was submitted to change the zoning from RM-4 to CD-1. The development proposal includes a 23-storey residential rental building with a four-storey podium while preserving two heritage houses. The proposal features 224 rental units, with 20% of the floor area secured for below-market rental units.

2799 Yew Street, Vancouver – Apartment

Seasons Retirement Communities acquired the southern portion of 2799 Yew Street, now Seasons Arbutus, an estimated 147-room retirement residence in Vancouver’s Kitsilano neighbourhood, for $70 million. Located one block from Connaught Park and the Kitsilano Community Centre, it offers access to nature trails, cycling, golf and tennis. Seasons Arbutus features a rooftop patio with ocean views, a putting green, the Carling Pub, a fitness centre, and a salon & spa. Starting at $4,915, residents can choose from studio to two-bedroom apartments, with flexible health and wellness services tailored to individual needs. The community also offers chef-prepared meals and diverse fitness programs to promote active aging.

Park Vista, 2060 Comox Street, Vancouver – Apartment

In December, Rosalie Holdings Ltd. acquired Park Vista, a 12-storey, 41-unit concrete rental tower at 2060 Comox Street in Vancouver’s West End for $18.5 million ($451,220 per unit). Built in 1965 on an 8,646 sq. ft. lot, the property includes 18 bachelor units, 19 one-bedrooms, and 4 penthouses. Amenities feature three leased washer/dryer sets, 20 secured parking stalls, 5 surface stalls (three leased to EVO), e-bike storage, and EV charging. Many suites have been updated with modern kitchens and bathrooms, and penthouses boast two balconies with 180-degree views. Recent upgrades include exterior painting, concrete repairs (2024), a new roof (last five years), re-piping (2003), a new hot water tank (2013), and an updated intercom/security system. The building generates about $674,000 in NOI, reflecting a 3.2% cap rate.

Figure 3 - OCR trends across 4 benchmark asset classes

Conclusion

Despite a year marked by fluctuating investment activity, driven by economic uncertainties, Vancouver’s real estate market demonstrated resilience in 2024. While the industrial sector faced challenges with increased availability rates, other sectors like office, multi-family and land experienced significant growth. Overall, Vancouver maintained its standing as a top investment destination, with strategic shifts towards purpose-built rentals and a focus on essential retail demonstrating adaptability to evolving market demands. The persistent “flight-to-quality” in the office sector further highlighted the nuanced nature of the city’s commercial real estate landscape, pointing to continued selective opportunities amidst broader market adjustments.

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