More workers are returning to downtown Victoria as office vacancy rate drops

Victoria’s downtown office vacancy rate has dropped this quarter, with more office workers returning to spaces in the city’s downtown core.

According to a report by Coldwell Banker Richard Ellis (CBRE) Canada, Victoria’s office vacancy rate has dropped to 10.5% in Q3, with a downtown office vacancy rate of 15.2%.

Victoria joined nine of the 11 markets across Canada to log positive net absorption of office space, with Toronto, Calgary and Montreal seeing the highest net absorption in the country.

““It’s time to turn the page on the office recovery,” said CBRE Canada research managing director Marc Meehan.

“That recovery is well entrenched and with fundamentals on solid footing we’re seeing the advantage in lease negotiations move from tenants to landlords in more cities.”

The report found that Victoria saw 27,382 square feet of net absorption in the downtown and suburban markets in the third quarter.

The 10.5% vacancy rate is down from 10.8% in Q2, but up from 9.7% in Q1. The rate jump between quarters one and two was largely due to TELUS Ocean adding around 154,000 square feet of office space to the market in Q2.

Much of the falling vacancy rate in the city is due to absorption of newly delivered supply, according to CRBE.

The report found that Victoria’s office demand is highly localized in the downtown core, with move-in-ready properties between 2,000 and 5,000 square feet being favoured over shell condition space.

With available space in the city becoming less available, net asking rents have trended upward over the last three quarters.

The report also indicated that leasing and sale activity moderated over the summer as tariff-related uncertainty became a more prominent concern in the market.

CBRE Canada expects that the effects of tariffs and counter-tariff measures will become clearer by year-end, especially for companies affected by US imports or dependent on export-driven revenues.

According to the report, the City of Victoria is also advancing a new industrial zoning framework to preserve employment areas and support long-term industrial uses.

The framework would consolidate 30 existing industrial zones in the city into three categories: light industrial, heavy industrial and marine industrial.

Under the proposed structure, core industrial capacity would be maintained while complementary non-industrial uses would be permitted where appropriate.

While the future remains to be seen for office space vacancy in the city, for now it seems more people are returning to the tradition of working from the available properties in the downtown core.