The overall office vacancy rate nudged down 85 basis points across Greater Halifax last year as positive absorption downtown counteracted loosening in the suburbs. Newly released 2020 data from Turner, Drake and Partners Ltd. (TDP) also shows a 1.6 per cent increase in net average rent, taking it up to $14.32 per square foot.
As of December, TDP pegs vacancies at 14 per cent across 12.2 million square feet of office space in eight submarkets. Nearly 60 per cent of that is located in downtown Halifax and its periphery, encompassing about 7.2 million square feet. Suburban Halifax and the newer development area of Dartmouth Crossing/City of Lakes business park account for the vast share of the remainder.
Downtown Halifax enjoyed more than 540,000 square feet of positive absorption in 2020, even with the addition of 215,000 square feet of new office inventory. The year-over-year vacancy rate dipped 140 basis points to rest at 18.6 per cent, while the average net rent crept up 1.2 per cent to $15.13 per square foot.
City of Lakes/Dartmouth Crossing made even greater gains, albeit in a smaller inventory of 1.4 million square feet. Vacancies there contracted by 560 basis points, cutting the rate to 14.4 per cent, while the average net rent rose 3.7 per cent to $14.50 per square foot.
Suburban Halifax remains the tightest office submarket with a vacancy rate hovering just beneath 8 per cent despite a 395 basis point increase in available space over the course of the year. Nearly 124,000 square feet of space was returned to the market. About 3,100 square feet of new space made a minimal impression in a total inventory of 2.18 million square feet.
Across Greater Halifax, Class A space is the loosest, with a vacancy rate of 15.9 per cent, but commands the highest average net rent at $17.69 per square foot. Class B registers the lowest vacancy at 12.8 per cent with average net rent of $12.96 per square foot.
In contrast to national trends, region-wide warehouse vacancies crept up by 50 basis points to hit 9 per cent. However, average net rent rose 1.5 per cent in 2020 to $8.12 per square foot. Approximately 175,000 square feet of new space came onto to the market last year, boosting total inventory to 8.15 million square feet.
The vast majority of that warehouse space — more than 6.7 million square feet — is concentrated in the City of Lakes business park, where the vacancy rate rose 90 basis points, to 8.3 per cent, over the course of 2020. The warehouse node registered 40,000 square feet of negative absorption, but nearly 150,000 square feet of new space was added to the market. Average net rent climbed 3.4 per cent to end the year at $7.67 per square feet.
TDP analysts offer a positive outlook for the Greater Halifax warehouse market in 2021 with the vacancy rate projected to fall to 5.6 per cent. The picture is less rosy in the office sector, where the combined impact of economic downturn and new supply underpin an expected loosening of the vacancy rate to 17 per cent.