Metro Vancouver's industrial real estate market has undergone significant shifts over the past several years. After experiencing historically tight conditions with vacancy rates below one percent, the market has entered a period of recalibration. Understanding current vacancy levels and absorption trends is essential for owners evaluating hold strategies, occupiers planning facility requirements, and investors assessing acquisition opportunities across the region.
Current Vacancy Landscape Across Metro Vancouver
As of early 2025, Metro Vancouver's overall industrial vacancy rate has risen to approximately 4.5 to 5.5 percent, depending on the data source and methodology. While this represents a notable increase from the sub-one-percent levels recorded in 2021 and 2022, it remains within a range that most market analysts consider healthy and balanced.
The distribution of vacancy is far from uniform across submarkets. Core markets such as Vancouver proper and Burnaby maintain tighter conditions, with vacancy rates typically ranging from 2.5 to 4 percent. These areas benefit from proximity to port facilities, established infrastructure, and limited land availability that restricts new supply.
Suburban markets tell a different story. Surrey, particularly the Campbell Heights and Port Kells areas, has seen vacancy climb into the 6 to 8 percent range as significant new construction has delivered into a market with moderating demand. Similarly, Langley and Abbotsford have experienced rising availability as speculative developments completed in 2023 and 2024 have taken longer to absorb than initially projected.
Richmond maintains a middle position, with vacancy hovering around 4 to 5 percent. The submarket's airport proximity and established logistics infrastructure continue to support demand, though lease-up timelines for new product have extended compared to previous years.
Absorption Trends and Demand Drivers
Net absorption across Metro Vancouver turned negative in several quarters during 2023 and early 2024, a stark contrast to the robust positive absorption recorded throughout 2020 and 2021. This shift reflected multiple factors converging simultaneously: the completion of a significant development pipeline, reduced expansion activity among e-commerce operators, and broader economic uncertainty affecting tenant decision-making.
More recent data suggests absorption has stabilized and returned to modestly positive territory in late 2024 and into 2025. However, the composition of demand has evolved. Large-scale speculative leasing of 100,000 square feet or greater has become less frequent, while activity in the 10,000 to 50,000 square foot range has remained relatively steady.
Key demand drivers currently include:
- Third-party logistics providers consolidating or rightsizing their footprints following pandemic-era expansion
- Food and beverage distributors requiring temperature-controlled facilities near population centres
- Construction and building materials suppliers maintaining inventory positions to serve regional development
- Manufacturing operations seeking modern facilities with adequate power and clear heights
- Last-mile delivery operators continuing to optimize distribution networks, though at a more measured pace than 2020-2022
The days of tenants leasing space based on aggressive growth projections appear to have moderated. Current absorption reflects more conservative, operationally driven requirements rather than speculative capacity building.
Submarket Performance Comparison
A closer examination of individual submarkets reveals meaningful variation in performance and outlook.
Vancouver and Burnaby: These core markets continue to demonstrate resilience. Limited developable land, strong port and rail connectivity, and established tenant bases support ongoing demand. Lease rates for quality product remain elevated, typically ranging from $22 to $28 per square foot net for modern warehouse space. Vacancy increases here have been modest compared to suburban areas.
Richmond: The market has absorbed new supply reasonably well, though concessions have become more common. Lease rates range from $18 to $24 per square foot net depending on building quality and location. The submarket benefits from YVR proximity and established food processing and distribution clusters.
Delta (Tilbury and Annacis Island): These areas serve critical logistics functions given port proximity and transportation access. Vacancy has increased but remains manageable. Larger format buildings have seen longer lease-up periods, while smaller and mid-bay product continues to trade efficiently.
Surrey (Campbell Heights, Port Kells): Significant new supply has outpaced absorption in these growth corridors. Landlords are increasingly offering inducements such as free rent periods and tenant improvement allowances to attract tenants. Lease rates have softened to the $16 to $20 per square foot net range for newer product, with older buildings experiencing more pressure.
Langley and Abbotsford: These eastern submarkets have seen the most pronounced vacancy increases, with some areas approaching 8 to 10 percent availability. While land costs support continued long-term development interest, near-term absorption remains challenged. Lease rates typically range from $14 to $18 per square foot net.
Port Coquitlam: This submarket maintains relatively stable conditions given its established tenant base and limited new supply additions. Vacancy remains in the 4 to 5 percent range with steady, if unspectacular, absorption.
Supply Pipeline and Future Outlook
The development pipeline has contracted meaningfully from its peak. Construction starts declined throughout 2023 and 2024 as developers responded to rising vacancy, increased construction costs, and higher financing rates. This supply discipline should support market rebalancing over the next 12 to 24 months.
Projects currently under construction are increasingly build-to-suit rather than speculative, reflecting developer caution and lender requirements for pre-leasing. This shift reduces the risk of significant future supply overhang but may create challenges for tenants requiring space on shorter timelines once market conditions tighten.
Land values have stabilized following a period of correction. Sites in core submarkets continue to command premium pricing, while suburban land has seen more meaningful adjustments. This recalibration may eventually support renewed development activity, though likely not until vacancy rates compress further.
Implications for Market Participants
For owners and landlords, the current environment demands realistic pricing expectations and willingness to provide market-appropriate concessions. Properties with strong fundamentals—modern specifications, good access, flexible configurations—continue to attract tenant interest. Older, functionally obsolete buildings face more significant challenges and may require capital investment or repositioning strategies.
For occupiers and tenants, market conditions have shifted meaningfully in their favour compared to 2021 and 2022. Negotiating leverage has improved, and options exist across most size ranges and submarkets. However, quality product in preferred locations still commands competitive attention. Tenants with flexibility on timing and submarket may find the most attractive opportunities in suburban markets where landlords are motivated to achieve occupancy.
For investors, the market presents both challenges and opportunities. Cap rate expansion has occurred, reflecting higher interest rates and increased vacancy risk. Assets with strong tenant covenants and remaining lease term trade at tighter yields than vacant or near-term rollover properties. The current environment may favour patient capital with the ability to acquire assets below replacement cost in submarkets positioned for long-term growth.
At NAI Commercial Vancouver, our team monitors these trends through proprietary research and the broader market intelligence available through the NAI Global network of industrial specialists across North America. This perspective informs the advice we provide to clients navigating Metro Vancouver's evolving industrial landscape.
Key Takeaways
Metro Vancouver's industrial market has transitioned from the extreme tightness of recent years to more balanced conditions. Vacancy rates in the 4.5 to 5.5 percent range, while elevated compared to historical lows, support healthy market function and provide options for occupiers without creating distress for well-positioned owners.
The critical insight for all market participants is that conditions vary significantly by submarket and product type. Broad regional statistics obscure meaningful local variation. Decision-making should be grounded in specific submarket dynamics, building quality considerations, and realistic assessment of competitive positioning rather than headline vacancy figures alone.
Those who approach the current market with clear-eyed analysis and appropriate expectations will find opportunities to execute transactions that serve their long-term objectives—whether acquiring, disposing, leasing, or investing in Metro Vancouver industrial real estate.