Demand for office space fell in five of the six major Atlantic Canadian cities over the past year, according to a new report by Turner Drake.
Halifax is the only Atlantic Canadian city where the demand for office space has recently grown. The report shows that, in the past year, demand for office space has grown by 1.5 per cent, while the five other cities surveyed saw a decrease. Halifax’s office vacancy rate now sits at 14.4 per cent.
In New Brunswick, some cities saw drastic reductions in office demand over the past year. Saint John is now the only Atlantic Canadian city where office vacancy is more than 20 per cent, jumping more than two percentage points in the past 12 months.
In Fredericton, the vacancy rate for offices skyrocketed from 9.5 per cent to 16.8 per cent. Moncton also saw a significant decrease in demand and an increase in vacancy. They went from just over 15 per cent vacancy to 19.9 per cent.
Turner Drake has observed, as many people predicted, that we are now living in a hybrid office model where people split their time between home and their workspace.
“Economic uncertainty and a potentially deep recession loom before us, coupled with doubt surrounding space utilization as companies shift back to offices after working from home during the pandemic – or don’t. A hybrid model is emerging as the apparent winner at least in the near term, with office workers having flexibility to work from home or in the office,” the report reads.
In terms of warehouses, demand for this type of space has grown throughout Atlantic Canada, with no vacancy rate hitting double digits.
Demand for warehouses grew by 3.6 per cent in Halifax, where vacancy rates are now under four per cent. Moncton saw a whopping 14.1 per cent increase in warehouse demand, where their vacancy rate dropped from double digits to just under six per cent. Saint John also saw massive improvements in demand, seeing their vacancy rate plummet from 15.3 per cent to eight per cent.
Fredericton was the only city where demand for warehouses dropped, seeing a decrease of 1.8 per cent.
“On the industrial side, stay-at-home orders increased demand for online shopping, and hence warehousing space,” notes Turner Drake. “Interest rates are up, out-of-the-house (and out of town) activities are back on the agenda, which should lead to a slowdown in consumer purchases as people tighten up on spending, so warehouse shortages may ease in the year ahead.”
In total, Turner Drake reviewed the usage of 41 million square feet of office and warehouse space for their study.
Derek Montague is a reporter with Huddle, an Acadia Broadcasting content partner.
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