Atlantic Canada markets were in sync with nationwide trends during the first half of 2022 with a tightening supply of warehouse space and year-over-year increases in average net office rents despite generally rising vacancy rates. Recently released stats from Turner, Drake & Partners finds St. John’s commanding the region’s highest average net rents for both office and warehouse, while Fredericton is the sole market to record a rising warehouse vacancy rate, even as it enjoyed the largest percentage gain in average net rents, at 10 per cent.
Halifax stands out with the most commercial inventory among the six surveyed markets. Its nearly 8 million square feet of warehouse supply is roughly equivalent to the combined total in the five other metros, which include St. John’s, Fredericton, Moncton, Saint John and Charlottetown.
There is about 12.4 million square feet of office space across the Halifax region, with 5.2 million square feet in the city’s downtown. St. John’s is the next largest office market with approximately 3.9 million square feet of stock. Charlottetown, the lone market to post a single-digit vacancy rate, has the smallest complement at just 853,000 square feet.
Halifax’s downtown office vacancy rate fell 140 basis points (bps) to 18.6 per cent from 20 per cent in the first half of 2021. That’s a steeper drop than in the Halifax region as a whole, which saw a 10-bps shrinkage in vacancies, but the regional rate remains lower, at 14.4 per cent. Average net office rents in downtown Halifax rose by slightly more than 2 per cent during the 12-month period to hit $16.23 per square foot (psf); region-wide they climbed 2.8 per cent to $15.05 psf.
St. John’s saw a nominal 4-bps increase in the office vacancy rate, keeping it in the range of 23 to 24 per cent, along with a 0.4 per cent year-over-year increase in average net rent, taking it up to $18.34 psf. New Brunswick’s three cities experienced sharper year-over-year jumps in vacancy, but the rates are still lower than in St. John’s — at 16.8 per cent in Fredericton; 19.8 per cent in Moncton; and 21.8 per cent in Saint John. Average net rents range from a low of $13.26 psf in Saint John to Fredericton’s high of $14.15 psf.
The office vacancy rate dipped 9 bps, down to 8.7 per cent, in Charlottetown, and average net rent rose 3 per cent, to $16.75 psf. There is just 319,000 square feet of warehouse inventory in the city, which posted a stable vacancy rate of 3.7 per cent and no change in year-over-year average net rent, remaining at $10.66 psf.
Moncton experienced a 990-bps slide in warehouse vacancies, pulling the rate down to 5.9 per cent, while average net rent rose nearly 3.5 per cent, to $7.18 psf. The city has Atlantic Canada’s second largest complement of warehouse space, at nearly 3.6 million square feet — significantly surpassing about 670,000 square feet in Saint John and 323,000 square feet in Fredericton.
Halifax’s warehouse vacancy rate fell by 140 bps, down to 3.8 per cent, in tandem with an 8 per cent increase in average net rent, pushing it up to $9.18 psf. About 370 bps were shaved off the warehouse vacancy rate in St. John’s, pushing it down to just below 10 per cent across about 2.9 million square feet of space. Average net rent increased by nearly 1.5 per cent, to $11.90 psf.
