February Field Trip: Learnings From Vancouver

How Bakeries, Bridges, and Built-To-Suites have helped improve leasing efficiency up North

Opening Bell ??: Did you know 90% of Canada’s population lives just 150 miles from the US border? You’re welcome for helping you at your next trivia night.

We took a trip up North last week to explore Vancouver, BC to see what we could learn from the international CRE market. To our surprise, Vancouver holds a significantly lower vacancy rate compared to major US cities coming in at just 7.7% vs Austin’s 17.7%,

Let’s take a look at to what our friends up north are doing to achieve such success:

Market Snapshot ??: Vancouver vs. Austin Office Market (Q4 2024 - Q1 2025)

Dive Deeper ??: Vancouver is obviously a smaller market than what currently is developed in Austin, but when you run the numbers, they’re able to lease their space at a more efficient rate. Three things stood out to us on our trip:

1. Bridges, Boats, & Buses: Vancouver features a much more challenging geography than Austin to get around with bodies of water at nearly every turn. The city has done a fantastic job with their CBD area specifically, offering multiple bridges from every direction to help ease commutes. They also feature an all electric public bus transportation system, helping alleviate the stress on their network.

1. Built-To-Suites and Sublease Activity: Sublease activity accounts for nearly 20% of all of Vancouver’s leasing activity, signaling a strong tenant desire for more move-in-ready spaces. Representative of what’s been going on at large, multiple tenants are downsizing their footprint while upgrading to newer spaces.
2. Bakeries and Enhanced Amenities: Canadians love a good sweet treat like the rest of us, highlighted by the abundance of bakeries found across the city (Brekka was a frequent favorite, but Trafiq was my personal favorite). Often found within office buildings themselves, they act as an enhanced amenity for office goers and drive overall foot traffic.

Pro Insight: Surrounding infrastructure improvements are outside most of our control, but with initiatives like the Light Rail in Austin, we can see more local economic support through ease of access improvements.

Built-To-Suites have had their success here in Austin lately, with FourHands taking 20,000 SF on the East side recently. Sublease availability has dropped below 5 MSF for the first time in 2 years, with BigCommerce signing a 90,000 SF lease from Expedia in the Domain.

Final Buzzer ??: While vacancy rates are at historic highs, Vancouver is entering stabilization while Austin still has significant surplus to work through. Major deliveries are coming online this quarter that will likely cause vacancy rates to climb even higher. Leasing incentives, flexible terms, and differentiated amenities continue to be all the rage as we get into 2025.

PS: Our favorite in-building tenant that doubled as an amenity was Wa Bagels, a Japanese bagel & bakery that made for the perfect breakfast and was popular among many office workers we talked to.