Are there too many empty office buildings in downtown Halifax?

No one disputes the fact that there is a lot of office space available in downtown Halifax right now. What is up for debate is how easy it will be to fill those vacancies.

'Frightening,' 'exciting,' or 'dynamic'? Three views on the state of Halifax's office inventory

A construction boom in recent years means lots of empty office space in downtown Halifax. (Anjuli Patil/CBC)

No one disputes the fact that there is a lot of office space available in downtown Halifax right now. What is up for debate is how easy it will be to fill those vacancies.

Alexandra Baird Allen, manager of the economic intelligence unit at commercial real estate consulting firm Turner Drake & Partners Ltd., called the vacancy rate in the central business district "frightening" and "unsustainable" during a recent interview on the CBC's Information Morning.

But Scott Armour McCrea, the CEO of investment and real estate company The Armour Group Limited, disagrees with that assessment, calling it "manufactured hysteria."

He used the word "exciting" to describe the possibilities when it comes to attracting new tenants to fill empty offices in downtown Halifax.

Alexandra Baird Allen says it could take 25 years or more to get back to a balanced vacancy rate in downtown Halifax. (Lance Lee Photography)

Falling somewhere in the middle is Bill MacAvoy, the managing director at Cushman and Wakefield Atlantic, a real estate services company.

He used the word "dynamic" to describe the vacancy rate in downtown Halifax, suggesting it varies according to the type — and age — of the building. One building might have a vacancy rate of two per cent, MacAvoy said, while another might have a vacancy rate of 50 per cent.

Vacancy rates debated

A market survey conducted by Turner Drake put the municipality's vacancy rate at about 15 per cent — almost 17 per cent if you focus on the central business district alone, Baird Allen said. That's a "far cry" from the desired five per cent you'd see in a healthy market, she said.

Scott Armour McCrea says he's seeing increased demand for office space in Halifax from almost all sectors. (Liam Hennessey/Applehead Studios)

McCrea said internal surveys conducted by his own team put the vacancy rate at somewhere between 13 and 14 per cent, but he specified that most of those vacancies are in buildings that most people would "never, ever want to work in."

Baird Allen countered by saying the vacancy rate for "Class A" space in downtown Halifax is more than 21 per cent, according to her data, which means at least some of the empty buildings are newer ones where "people would want to work."

City is 'under-demolished'

McCrea said the problem is that Halifax is "under-demolished." He said he anticipates much of the empty space in the city will be retrofitted, converted or torn down within the next decade.

McCrea says the city is "under-demolished" and it's time to replace the cranes with wrecking balls. (Craig Paisley/CBC)

MacAvoy agreed the city's vacancies are concentrated in certain types of buildings.

Offices connected by pedways are still performing "really well," he said, and newer buildings like the new convention centre will start to fill up soon.

MacAvoy added it usually takes time to fill a brand new building because tenants have to wait for their current leases to expire before they can make the move.

What does the future hold?

On average, about 100,000 square feet of office space was filled in the Halifax Regional Municipality each year over the past five years, said Baird Allen. In the central business district of Halifax — roughly from the Citadel to the waterfront and from Cogswell Street to the Maritime Centre — the average was 25,000 square feet a year over the past five years, she said.

At that rate, Baird Allen said, it would take 25 years to get back to a vacancy rate she could be happy with, and "that's assuming that no new space comes to market in that time."

Bill MacAvoy says the vacancy rate in downtown Halifax fluctuates dramatically according to the type and age of the building. (Applehead Studios)

McCrea said his numbers show that around 300,000 square feet of office space was filled in Halifax last year alone, and he's seeing "increased demand" for office space from almost every sector, except for oil and gas.

"The absorption is the highest that most of us have seen in our careers," he said.

Production is proof of demand, he said. If it was going to be hard to find tenants, McCrea asked, "why would we be building buildings?" 

But Baird Allen said a shrinking workforce and a shift towards cubicles, collaborative workspaces and virtual commuting mean less demand for traditional office buildings. 

Halifax's new convention centre, Nova Centre, still isn't full, even though it is now hosting events. (Paul Palmeter/CBC)

About the Author

Nina Corfu

Associate Producer

Nina Corfu is a journalist based in Halifax. She aims to tell stories that people want to share around the dinner table each night. If you have a snackable story idea to share, please drop her a line at nina.corfu@cbc.ca.

With files from CBC's Information Morning