Fredericton is the lone office market in Atlantic Canada to boast a vacancy rate below the national average of 10.7 per cent. Turner Drake & Partners Ltd. reports 133,000 square feet of positive absorption in New Brunswick’s capital since June 2017, trimming nearly 170 basis points from last year’s vacancy rate to take it below 9.5 per cent. Class A office supply is even scarcer, with a vacancy rate of 6.3 per cent, allowing it to command an average net rent of $15.38 per square foot.
Saint John registers the highest vacancy rate of New Brunswick’s three provincial centres, but it also shows the year’s most marked improvement — dropping 370 basis points from 20.7 per cent to 17 per cent. Class A space records a vacancy rate above the city’s average, at nearly 18.2 per cent, but it achieves higher rents than Fredericton’s Class A space, with an average net rent of $15.83 per square foot.
The vacancy rate in Moncton has also declined since midyear 2017, from 13. 4 to 12.17 per cent. It dips further still, to about 9.6 per cent, for Class A office space, which garners average net rent of $14.65 per square foot
The three New Brunswick office markets collectively offer about 7.9 million square feet of office space in 164 buildings. Approximately 50,000 square feet of new office space was added in the Fredericton market since June 2017, while inventory grew by less than 7,000 square feet in Saint John and less than 4,000 square feet in Moncton. For 2018, however, Saint John will see an influx of 300,000 square feet of owner-occupied space when the new Irving headquarters opens and the company’s employees relocate from five smaller buildings.
Looking east to Newfoundland and Labrador, the vacancy rate climbed 200 basis points and now rests slightly above 20 per cent in St. John’s, which is the second largest Atlantic market, after Halifax, with nearly 4 million square feet of office space in 85 buildings. The Class A vacancy rate is even higher, at 23 per cent — more than 7 per cent greater than the 15.9 per cent vacancies in Class B office space.
Average net rents declined citywide, from $19.07 per square foot at midyear 2017 to $18.88 per square foot. However, Class A space commands an average net rent of $22.55 per square foot, surpassing CBRE’s second quarter findings for Class A space in downtown Halifax, which is pegged at $19.31 per square foot. St. John’s Class B office stock records an average net rent of $18.11 per square foot.