Fredericton, Moncton Among Region’s Lowest Office Vacancy Rates
FREDERICTON – The office vacancy rate is declining in New Brunswick according to the latest market survey from Atlantic Canadian real estate counsellors Turner and Drake.
Its report found that the total office vacancy rate for Fredericton, Saint John and Moncton edged down from 13.66 per cent December 2017 to 11.26 per cent in 2018. The decreases in vacancy for each of Fredericton and Moncton were sizable enough to negate the small increase in Saint John.
Fredericton’s overall vacancy rate dropped from 9.07 per cent in December 2017 to 7.05 per cent in 2018, the lowest it has been in the past six years. Moncton saw the largest decrease in the province, from 12.74 per cent to 8.02 per cent over the same period.
Saint John, however, saw an increase in vacancies, going up from 18.74 per cent in 2017 to 19.10 per cent in 2018.
Of the six major office markets in Atlantic Canada, Fredericton now has the healthiest vacancy rate overall, with Moncton coming in third after Charlottetown (7.59 per cent). Saint John joins Halifax (13.86 per cent) and St. John’s (17.21 per cent).
For the survey, office buildings are also categorised by class. Class A buildings command the highest rents in their community and have distinctive design and lobbies. Class B buildings offer “no frills” modern, air-conditioned space. Class C buildings make up the remainder of the office rental market.
The Central Business District (CBD) and in particular, with its Class A space, is the bellwether of a city’s office rental market.
In uptown Saint John, Class A office space is the strongest performer, with vacancy falling for the second year in a row, from 16.79 per cent to 16.46 per cent.
Fredericton’s downtown Class A mirrors that city’s overall market, dropping from 9.75 per cent to 7.54 per cent.
Moncton’s downtown outperformed all other major cities in Atlantic Canada, with vacancy plummeting from 9.46 per cent to 3.36 per cent – which is considered to be effective full occupancy.
The survey found that New Brunswick still has the best deals on net rental rates in Atlantic Canada. The overall average net rents in the three cities are all below the $14 per-square-foot mark.
Moncton has the lowest rates on average, dropping from $13.13 per square foot in 2017 to 12.93 per square foot in 2018 ($14.28 per square foot for downtown Class A).
Average rents crept up year-over-year in Saint John from $12.40 per square foot to $13.03 per square foot ($15.83 per square foot for uptown Class A), and in Fredericton from $13.27 per square foot to $13.95 per square foot ($16.67 per square foot for downtown Class A).
This is still lower than the average rates elsewhere in Atlantic Canada with Halifax’s at $14.00 per square foot; St. John’s $18.99per square foot; and Charlottetown $14.87 per square foot.
For the survey, Turner and Drake had a team of trained researchers collected rental, operating expense and vacancy data for 165 office buildings, some as small as 5,000 square feet, with an aggregate rentable area of almost 8 million square feet.
Photo: Ross Ventures is constructing a new office building with Class A office space in downtown Fredericton. Image: Ross Ventures Facebook page.