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Metro Vancouver retail tenants ‘hard-pressed’ to find space

CEBA loans and persistently low consumer spending identified as potential challenges for the market.
Oakridge Centre is set to deliver roughly a million square feet of space in 2024, according to commercial real estate firm Colliers Canada

Some Metro Vancouver consumers might be pinching their pennies but this hasn’t weakened the region’s retail real estate market. 

Average vacancy in high traffic areas such as Robson Street, Yaletown and Kitsilano remained unchanged at 3.9 per cent when compared to June 2023, according to a Jan. 24 report from Colliers Canada. 

Across the Metro Vancouver region, average vacancy decreased from 1.5 per cent to 0.7 per cent since last summer, leaving hopeful tenants “hard pressed to find suitable options.” 

“Retailers have shown a resilient front as evidenced by an overall decrease in retail vacancy rates. Demand for retail space remains strong with marginal changes in vacancies and will likely remain strong in the coming year,” said the report. 

The retail market finished off 2023 in a strong position when compared to industrial and office real estate, according to the commercial real estate firm. Though the outlook for this year is positive, the repayment of Canada Emergency Business Account (CEBA) loans and persistently low consumer spending are identified as two potential challenges for the industry. 

“The potential effect of the expiration of [CEBA] loans may render some businesses no longer feasible and will be closely monitored for impact on the market in the coming months,” said Colliers, referencing pandemic loans from the federal government geared towards keeping small businesses afloat.

As Metro Vancouverites prioritize saving, “value-seeking behaviours” are becoming the norm. 

“In such a budget-conscious market, cheap eats such as pizza and fast-food restaurants have shown consistent growth. Customers have also shifted their eating-out habits focusing on happy hour deals and ordering appetizers instead of mains. Mid-tier brands and value grocers have likewise shown better performance in contrast to their higher-end counterparts,” said the report. 

New developments launching in 2024 include the Oakridge Centre redevelopment by Westbank Corp. and Quadreal Property Group, which is expected to deliver roughly one million square feet of space.

“Opportunities for expansion, especially in high-demand locations, remain focused on new developments,” said the report, adding that new housing legislation from the B.C. government may also add new square footage.

“It remains to be seen how quickly these newly unlocked developments will take to come to market, as developers continue to struggle with high land and labour costs as well as expensive and difficult-to-find financing. However, these new developments will be a hot area to watch in the coming years.”