A Vancouver Economic Commission (VEC) report confirms Vancouver’s economy continues to suffer from the lingering impacts of the pandemic and more recent impacts of inflation and tight labour market, but otherwise remains comparatively resilient, thanks in part to a diversified economy.
Metro Vancouver businesses, having recovered somewhat from the pandemic, are more recently feeling the pinch from inflation and its cure – rising interest rates – as well as challenges with the attraction and retention of workers in a tight labour market, the VEC's summer 2023 report finds.
But despite all the shocks businesses have faced, Metro Vancouver remains fairly resilient, the report concludes.
“From February 2020 to February 2023 (the most recent month of data available), Metro Vancouver businesses continued to bounce back from COVID-19, with active businesses increasing by 4,953 (5.9 per cent) driven by growth in professional, scientific and technical services and construction,” the report notes.
According Canadian Real Estate Services, office vacancy rates in downtown Vancouver were 10.4 per cent in the first quarter of 2023 (up from 9.8 per cent in Q4 2022), which the VEC says is the highest in 10 years.
The report notes forecasts that project the downtown office vacancy rate for Metro Vancouver could go as high as 12 per cent by the end of this year.
“Despite this… of the 1.7 million square feet under construction in downtown Vancouver, 99 per cent is pre-leased. Significant spaces added to the downtown core include Bosa Waterfront Centre. Despite the increasing vacancy rate, Vancouver maintains its position as the city with the lowest office vacancy rate in North America.”
The VEC projects Metro Vancouver’s real GDP will grow by just 0.5 per cent in 2023, but bounce back in 2024. Negative growth is forecast for certain sectors: Information and cultural (-3.4 per cent), wholesale and retail (-2.5 per cent) and industrial (-0.6 per cent.
“Metro Vancouver’s economy remains less fragile compared with other Canadian metropolitan cities and is forecasted to jump back up to 2.8 per cent in 2024," the report states.
The high tech sector is one of Metro Vancouver’s most important business sectors, accounting for 9.1 per cent of its jobs. The tech sector in general in North America has been hit with major stock declines and large-scale layoffs.
“Despite this, unemployment in the sector has remained relatively low, attributed by some recruitment firms as being due to the tightness of the labour market and a corresponding boom in retirements,” the VEC report finds.
“While travel-based industries like tourism and hospitality were devastated globally, Vancouver’s economic diversification helped mitigate some of the impacts.”
