Office markets in much of Atlantic Canada appear to be on the road to recovery, according to Turner Drake & Partners.
The Halifax-based real estate counsellors collected data for hundreds of buildings in the region’s six major cities.
Alexandra Baird Allen, manager of the economic intelligence unit, said they saw improvements almost all across the board between June 2020 and June 2021.
“We saw increases in demand in Halifax, Moncton, Fredericton, and Charlottetown, and some decline in demand in Saint John, New Brunswick, as well as St. John’s, Newfoundland,” Baird Allen said in an interview.
Baird Allen suspects part of the reason for lower demand in Saint John and St. John’s is their more industrial-type economic base.
Each city also has a strong component of owner-occupied properties, she said, which are not part of the rental market.
Demand increase by 11.9 per cent in Halifax, 6.7 per cent in Moncton, 3.0 per cent in Fredericton, and 2.9 per cent in Charlottetown, while it fell by 2.6 per cent in St. John’s and 6.7 per cent in Saint John.
While demand for office space increased in most cities, the vacancy rate inched upward in most of Atlantic Canada’s major cities, due in part to new supply being added.
The vacancy increased in Fredericton (9.48 per cent), Moncton (14.4 per cent), Saint John (19.54 per cent) and St. John’s (23.26 per cent), but fell in Charlottetown (7.52 per cent) and Halifax (14.56 per cent).
Average net rents were up across the board in Atlantic Canada to $18.43 per square foot in St. John’s, $16.27 in Charlottetown, $14.67 in Halifax, $13.99 in Fredericton, $13.15 in Moncton, and $13.10 in Saint John.
Baird Allen said while the general consensus is that workers will return to offices, she cautioned that the full impact of the pandemic might not be known for a while as leases are typically for five years.
“There’s some degree of concern that what it may be is that the leases are just still in place, and so the space is still under contract, not available to rent. It might not be occupied, but it may not be vacant if people are continuing to work from home,” she said.
“That being said, what we’re seeing seems to be a lot of companies returning to offices and a lot of talk that while there are some benefits to the work-from-home model and some companies may be flexible in terms of allowing their employees to work from home some of the time, that overall for a lot of sectors that use office space, that collaborative work environment is very important.”
Meanwhile, five of the six cities saw increased demand for rental warehouse space, with Saint John leading the charge with a 24.4 per cent increase.
Demand also grew in Halifax (5.4 per cent), Moncton (4.1 per cent), Charlottetown (2.6 per cent) and St. John’s (0.9 per cent). It fell by 0.8 per cent in Fredericton.
Turner Drake said the pandemic shifted buying patterns at an increasing rate to online shopping and in favour of consumer goods and renovation materials in lieu of travel spending.
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