Downtown Halifax office vacancy rate is ‘staggering’, says study
Staggering: that’s what a Halifax real estate firm is calling the city’s downtown office vacancy rate.
A December 2015 study from Turner Drake & Partners Ltd. found the overall office vacancy rate in the city is at 15.83 per cent.
“The only time I’ve seen vacancy rates which approached these figures were back in the 1980s in St. John’s, N.L. At that time, they were up about 20 per cent and St. John’s was generally regarded as a disaster area,” said Mike Turner.
“I suppose it depends if you want Halifax to be a commercial centre or not, but I think we’ve reached a tipping point where it’s too late to do anything about it.”
The study found Class A space, which is often taken by legal firms and banks, has seen a vacancy rate jump from 18.85 per cent to over 26 per cent.
Class C-space vacancy has almost doubled, to nearly 33 per cent.
“I think the vacancy rates in the Class A space will reduce eventually. They will take tenants from the Class B space,” Turner said.
“But ultimately, you run out of tenants so yes, I’d say it’s staggering.”
Paul MacKinnon, the executive director of the Downtown Halifax Business Commission, agrees something needs to be done to bring more tenants to the downtown.
He says robust construction, including the Nova Centre, is bringing new Class A office space to the core for the first time in decades.
“Having that new stock come online is naturally going to drive up the vacancy rates until things fill up,” MacKinnon said.
He anticipates there will be a “shuffling of existing tenants,” as businesses that want to stay in the downtown move to the newer buildings that are built.
“So what that leaves in its wake are potentially some former Class A office buildings that are older being vacant. I think the real question is what’s going to move into those spaces,” he said.
One suggestion is to stop encouraging development outside of the downtown core — including the Bayers Lake and Burnside industrial parks — which lures away tenants.
Downtown councillor Waye Mason agrees that should be a priority.
“That’s why in the new regional plan there’s a move to make it so that in Burnside, that it is strictly labelled industrial and we see less office and less retail happening,” Mason said.
“The problem is a lot of this stuff was zoned and permitted five, 10, 20 years ago before amalgamation and it’s really hard to stop it from being built once you’ve given permission to it. So we got to see that level out a bit and we’ll continue to put the brakes on new office out there.”
© 2016 Shaw Media