Fredericton Commercial Real Estate Remains Stable Despite Pandemic
This is part of a series of stories on the shifting market for commercial real estate in Maritime cities like Saint John, Moncton, Halifax and Fredericton.
FREDERICTON – While the Covid-19 pandemic has brought uncertainty across all industries, the city’s commercial real estate market has been able to weather the storm.
People around the world have been changing the way they work, with many businesses opting to have people work from home, but that shift has shown only a slight impact on the city’s major real estate players.
Numbers from Turner Drake released earlier this month show that while vacancy has increased, so has demand for office and industrial space, leading to a 3.2 percentage point increase in the vacancy rate from the end of 2019 to the end of 2020, settling at 9.74 percent.
Compared to other Atlantic Canadian cities, the vacancy rate remains the lowest. In Saint John, the vacancy rate sits at 18.16 percent, Halifax is at 14.87 percent, and Moncton sits at 12.84 percent.
The lease price has had a slight bump over the year, ticking up 0.3 percent to $13.88 per square foot. In Downtown Fredericton, overall net rents held steady at $15.26 per square foot, while class A rents went up 0.9 per cent to $16.14 per square foot.
“There’s usually a consistent demand in Fredericton,” said Mike Joyce, Senior Sales Associate with CBRE. “So even though there’s a modest uptake on the vacancy rate, we’ve been fortunate to have a strong economy in Fredericton.”
Even with more people doing remote work, Joyce says offices have remained open without an uptake in vacancies as they consider their futures post-pandemic.
“I think people have been very cautious through the cycle,” said Joyce. “People have been adjusting, but in terms of any overall trends or anything it’s pretty uncertain in terms of how everything’s going to look when we come out of the Covid situation.”
Joyce says that of the commercial office space in CBRE’s portfolio, it’s difficult to get an indication on how Covid has affected vacancy numbers, but he has not noticed any significant shift in vacancies.
“It’s unfortunate, but we have seen businesses close or have to reduce their workspace because of COVID,” said Joyce. “But we have seen other businesses have to expand to meet existing demand, whether to a larger space or a second location.”
Recruiting new tenants has been a challenge for CBRE throughout Covid as many are skeptical of the rental market.
“I think the unknown factors moving forward, people just want to take a closer look at the decisions they make and be more conscientious in terms of how they’re exercising things moving forward and not knowing what’s coming down the road,” said Joyce.
Retail Market Remains Stable As Focus Shifts To Quick Service
Plaza Reit’s portfolio consists mainly of buildings for retail locations across Atlantic Canada, with many located in Fredericton. Many of their clients include convenience retail and quick-service restaurants.
“I think it’s safe to say that we’ve basically stood still through Covid,” said Peter MacKenzie, EVP & Chief Investment Officer for Plaza Reit. “We’ve been really happy and really fortunate to be able to do that.”
While there has been a lot of activity attracting grocers, dollar stores, and quick service retail and restaurants, MacKenzie says it’s been harder to attract sit-down restaurants and fashion stores throughout the pandemic.
“So we’ve actually refocused our efforts on the tenants that are there and the tenants that are expanding,” said MacKenzie. “We’re giving all our tenants some time time to recoup from all of the effects of Covid. We’ve had to reposition our leasing efforts just to accommodate the demand.”
According to both Joyce and MacKenzie, it has been a challenge to bring in new tenants when many prospective clients live outside the province and cannot travel.
“Because of travel restrictions, we are seeing some delays on getting our deals done,” said MacKenzie.
Despite this, they have adapted the use of technology whenever possible to help fill the space.
“We’ve been using video conferencing calls, virtual tours, we have been looking at 3D tours,” said Joyce. For people that are potential clients, it really does help in terms of being able to keep things moving forward by using technology.”
Liam Floyd is a reporter for Huddle. Send him story suggestions: [email protected].
Other stories in this series:
- In Defiance Of Pandemic, Halifax Sees Office Vacancy Rates Drop
- Saint John Commercial Office Spaces Not Emptying Because of Covid-19
- Moncton’s Office Buildings Are Emptier, But Industrial Development Is Booming