As oil prices continue to plummet, people involved with the St. John's condo and commercial real estate markets say they are beginning to feel the pinch.

They say the pinch is mostly being felt on the high end, as planned condominiums transition to apartment complexes, and existing owners of luxury apartments find renters hard to come by.

Consider a place like The Narrows, a recently built high-end condominium complex on Duckworth Street, in the city's downtown. 

Real estate agent Larry Hann says one condo owner had to drop the rent on one property from $5,000 a month to $3,000 in hopes of finding a tenant.

But even at $2,000 less than the former asking price, the condo is still vacant.

Larry Hann

Larry Hann says the decline in oil prices has made it more difficult to rent out luxury apartments in St. John's. (Eddy Kennedy/CBC)

"It's fairly obvious to anyone working in the industry the prices are coming down," said Hann.

"There's a lot of inventory on the market — there's a lot of nervous people, nervous investors."

According to Hann, oil companies are looking for any solution to cut costs these days.

One of the ways they're doing this, he said, is by choosing to rent out fewer luxury apartments for executives.

"The oil executives [are] the primary catalyst for the executive condominium market and because [of] the lack of new business — new oil business — the demand is down." 

Times have changed

Luxury Condo

Condominiums near the St. John's waterfront were built during the boom years in the offshore oil market. (Eddy Kennedy/CBC)

Times have changed in the condo market, even since The Narrows opened in 2011.

Owners of condominium units then were entering a booming market, fuelled by an oil boom in Newfoundland and Labrador. 

But as jobs are cut, and oil companies tighten their belts, property owners say that many of the people who may have once considered purchasing a luxury condo or renting one downtown are no longer doing so.

New condo construction has also slowed to a halt in St. John's, and many companies planning to develop condos have switched focus, and turned them into rental apartments instead. 

As of now, the Canadian Mortgage and Housing Corporation said it is not expecting overall real estate prices to fall in St. John's.

But if oil prices continue to stay low and job cuts continue, that might change. 

Commercial real estate an area to watch

Charlie Oliver

Charlie Oliver says that lower oil prices are beginning to have an effect on the commercial real estate market. (Ted Dillon/CBC)

Charlie Oliver, whose company Martek Morgan Finch owns a lot of commercial real estate in St. John's, said that the markets downturn is inevitable, and that his company is ready to weather the storm.

He sees the low price in oil as having a two-tiered effect, which will lead to companies trying to minimize their costs.

"We're going to see the oil companies themselves and we're going to see the subcontractors respond to low oil prices by saying we've got to consolidate and shrink down our operating costs," said Oliver. 

"Part of that relates to office space and the rental rates they are paying for it."

When leases expire, Oliver thinks that many oil companies will seek to renegotiate their leases.

In some cases, this may also result in wider vacancies in commercial office buildings.

"I think we in Newfoundland have always been highly creative. We've always found ways out of the puzzle, out of the maze," he said.  

"We should over the next year or two find a way to minimize or mitigate the vacancy."

With files from Peter Cowan