What Happened

Downtown Vancouver recorded 106 million visits in 2024, marking a 7.8 per cent decline from the previous year despite overall population growth in the region. Jane Talbot, CEO of the Downtown Vancouver Business Improvement Association, highlighted that the share of local visitors dropped to 50.4 per cent, down from 52.9 per cent in 2023, while visits from city residents fell by 12 per cent. The decline is attributed to rising costs of living and safety concerns, with shoplifting incidents in the downtown core surging by 40 per cent in 2024. Physical retail space is also contracting, evidenced by Hudson's Bay Co.'s plan to close its 637,000-square-foot flagship store at Granville and West Georgia by June 2026. Additionally, Cadillac Fairview’s 230,000-square-foot former Nordstrom site has remained vacant since June 2023, contributing to a Granville Street vacancy rate that jumped from 22.1 per cent to 29.3 per cent. While Taylor Swift concerts provided a temporary 26 per cent spending boost, long-term trends show significant drops on key corridors like Alberni Street, which saw an 11.7 per cent decline in visits.

Why It Matters

The data indicates a structural shift in how downtown Vancouver is utilized, moving away from consistent local daily commerce toward event-driven tourism. When local residents reduce their footprint in the district due to inflation and safety perceptions, the economic stability of the core becomes heavily reliant on non-local visitors. This creates a volatile revenue environment for businesses that previously depended on the daily foot traffic of the local workforce and residents. The high vacancy rates on Granville Street and the departure of anchor tenants like Hudson's Bay signal that the traditional retail model is struggling to adapt to these new consumer behaviors. Without a recovery in local visitation, the district faces prolonged challenges in maintaining a balanced mix of residential, commercial, and entertainment uses.

Local Vancouver / Burnaby Context

The Downtown Vancouver Business Improvement Association's report underscores the fragility of the downtown core's economic base. While the province has set aggressive housing targets to increase density, the current retail environment suggests that ground-floor commercial viability is under severe pressure. The 29.3 per cent vacancy rate on Granville Street is a critical metric for developers and investors, as high vacancies can depress property values and delay redevelopment timelines. The shift in visitor demographics, with locals comprising only half of the traffic, aligns with broader concerns about the cost of living in Metro Vancouver pushing residents to spend elsewhere. The safety perception issue, highlighted by the 40 per cent rise in shoplifting, is a recurring theme in local brokerage experience, often deterring high-net-worth individuals from frequenting the area. This context is vital for understanding the broader health of the commercial real estate sector in Vancouver, which is distinct from the residential housing market but equally sensitive to economic conditions.

Market Impact

For commercial property owners, the 7.8 per cent drop in foot traffic and rising vacancies suggest a challenging leasing environment. Retailers may demand longer rent-free periods or lower base rents to offset the risk of reduced customer flow. The closure of major anchors like Hudson's Bay can create a 'dead zone' effect, further reducing foot traffic for remaining businesses. Conversely, businesses that can leverage event-driven traffic, such as those near entertainment venues, may see sporadic spikes in revenue, though this is less predictable than daily local commerce. The high vacancy rates also indicate potential opportunities for adaptive reuse or rezoning, particularly for properties that can transition from retail to residential or mixed-use, aligning with provincial housing goals.

Builder / Developer Perspective

Developers face a complex landscape where high retail vacancies may justify rezoning applications for residential towers, as seen in the proposed high-rise towers near the Commodore Ballroom. However, the cost of construction and financing remains a barrier, and the lack of a robust local retail tenant base may reduce the premium for ground-floor commercial space in new developments. The success of projects like the Cineplex and Rec Room in December highlights that entertainment and experience-based uses are currently more viable than traditional retail. Builders must carefully assess the long-term demand for commercial space versus residential units in the downtown core.

BurnabyHouse Insight

The 7.8 per cent drop in downtown visits is a stark reminder that population growth alone does not guarantee economic vitality in the urban core. The shift from local to non-local visitors, coupled with the 40 per cent surge in shoplifting, suggests that the downtown experience has fundamentally changed. For investors and developers, the key takeaway is that the traditional retail model is in decline, and the future of the downtown core lies in mixed-use developments that prioritize residential and entertainment uses over ground-floor retail. The high vacancy rates on Granville Street are not just a symptom of the pandemic but a structural shift that requires a new approach to urban planning and investment. The province's housing targets may accelerate this transition, but it will take time for the market to adjust to the new reality of a less commercially dense downtown.