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Vancouver Office Tenants Sacrificing Building Quality for Rapid Transit Access

Jones Lang LaSalle reveals second Vancouver Rapid Transit Office Index

VANCOUVER, June 13, 2012 — Office tenants are sacrificing building quality for convenient access to rapid transit and demand for this space will continue to grow, says Jones Lang LaSalle’s semi-annual Vancouver Rapid Transit Office Index.  Class B and C office buildings that are conveniently located within 500 metres (the “RTI”) of rapid transit hubs are outperforming class A buildings located outside the RTI. Overall Metro Vancouver vacancy rates are almost twice as high at buildings further than 500 meters away from a rapid transit station, compared to those located closer. 

“The trend for choosing proximity to transit over building quality is not abating,” said Norm Taylor, Senior Vice President at Jones Lang LaSalle.  “Owners of offices with close proximity to rapid transit are enjoying the benefits of higher capital valuations in addition to lower vacancy rates and higher net rental rates, while tenants are choosing location, location, location.”

The report, which analyses office properties outside the downtown core and within 500 meters of rapid transit stations in Metro Vancouver, finds that there is an average rental premium of 22.8 percent for transit oriented office space in Vancouver, Burnaby and Surrey. Total vacancy levels within the overall Rapid Transit Index are at 6.5 percent, down from 8.9 percent when the inaugural report was published in Q4 2011.

“We have found that buildings near Canada Line stations have the lowest vacancy rate at 3.2 percent, followed by the Expo Line at 5.8 percent and then the Millennium Line at 10.7 percent,” added Taylor.  “The largest RTI vacancy decline over the last two quarters was a 4.1 percent drop seen in New Westminster, where the ORTI (outside 500 metres) vacancy rate at 23.4 percent is seven times higher than the RTI rate.” 

Transit oriented office space is particularly scarce in Surrey, where vacancy rates for RTI offices reside at 1.2 percent versus an ORTI vacancy rate of 26.5 percent.  In Vancouver, the gap is narrowing, with total RTI vacancy at 4.6 percent and ORTI at 5.5 percent.  However, demand for Class B RTI space in Vancouver is higher than the better quality class A ORTI office space. Rental premiums reflect this as average asking rents in class B Vancouver RTI space have reached $25.32 per square foot compared to class A ORTI space which is set at $22.72 per square foot.
About the Vancouver Rapid Transit Office Index
Jones Lang LaSalle’s Vancouver Rapid Transit Office Index is the result of an in-depth study on trends in Metro Vancouver vacancy rates and occupancy costs for buildings outside downtown within half a kilometer of a rapid transit station.

Jones Lang LaSalle has operated in Canada for more than a decade. With its Canada headquarters in Toronto, the firm also operates in Mississauga, Montreal, Ottawa, Vancouver and Calgary. Jones Lang LaSalle offers tenant and landlord representation, project and development services, investment sales, mobile engineering services, corporate retail solutions and integrated facilities management services to owners and tenants in Canada.  The firm manages 31 million square feet of facilities across Canada.

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.2 billion of assets under management. For further information, please visit