Metro Vancouver’s commercial real estate market is going through a rough patch but has a promising long-term outlook, says one large franchise.

The office and industrial sectors have been seeing higher vacancies due to factors including remote work, new supply and economic weakness, according to Royal LePage Commercial.

For example, downtown Vancouver’s average office vacancy rate in 2025 for Class B buildings increased by 7.1% year-over-year compared to 2024, according to data released by the firm Thursday.

This was partly because Class A landlords are offering major incentives, drawing tenants away from Class B buildings, said Raman Bayanzadeh, principal of the commercial real estate investment and development team with Royal LePage Sussex.

In regions outside of downtown, the average 2025 vacancy rate increased by 5.7% year-over-year for Class A buildings and by 20.9% for Class C buildings, though Class B assets saw a decrease here.

Office is currently one of the softest commercial asset classes because of the rise in remote and hybrid work, new construction in recent years and a relative lack of major head offices and government agencies compared to Toronto and Ottawa, Bayanzadeh said.

But recent deals point to long-term strength, he said, citing Oxford Properties Group buying out the Canada Pension Plan Investment Board’s 50% interest in The Stack and Marine Building last June; the acquisition of The Post by Spain’s Pontegadea Group last November; and the acquisition of Oceanic Plaza by BGO, formerly known as BentallGreenOak, last month.

On the industrial side, the vacancy rate for all industry types increased by 18.2% downtown and by 19.4% for regions outside downtown, said Royal LePage.

Gross industrial rents – which, unlike basic rents, reflect total occupancy costs – have also come down. From 2024 to 2025, they decreased by 7.3% downtown and by 2.3% outside of downtown, said the data.

Industrial is seeing a downturn due to a sluggish economy and the “huge amount” of new supply delivered in recent years coming out of COVID-era tightness, said Bayanzadeh.

Still, tariffs have not been a major factor in the industrial slowdown, and the long-term outlook is “very safe” because of a small supply pipeline, geographic constraints and restrictions on developing agricultural land, he said.

Royal LePage’s commercial division is among the largest in Canada and has more than 600 agents in major cities and smaller towns across the country. The firm sourced its data from Altus Group, a global provider of commercial real estate intelligence.

Investors in Metro Vancouver may wish to consider asset classes like retail and multi-family, which have kept their value, Bayanzadeh said. Multi-family offers stability, while retail assets anchored by food and pharmacy are favourable and can be counted on in the future, he said.

Investors are looking at the bigger picture and the long term, he said.

“They’re seeing this downturn as an opportunity to buy assets at a price point that wasn’t available before, so if you’re looking at 10 years or longer, this is a good time to buy many of the assets,” he said.

As Vacancies Rise, Commercial Real Estate Investors are Looking at The Bigger Picture by Jami Makan | BIV