The office vacancy rate in Halifax increased to 15.8 per cent last year, prompting one real estate consultant to declare that the commercial sector in the city's downtown is on its death bed.

"I think the downtown is pretty well finished as the commercial centre," said Mike Turner, president of Turner Drake and Partners Ltd., a real estate consulting firm in Halifax.

The commercial vacancy rate highlights how much office space is available in the city. Turner said a healthy rate would be around five per cent, and argues it is a barometer of the success of the city as a commercial centre.

Every six months Turner's firm conducts real estate surveys for the federal government for six major centres in Atlantic Canada.   

Its latest survey was completed last month and examined rental, operating expense and vacancy data for 306 office and warehouse buildings. It found the commercial vacancy rate increased by 3.5 percentage points. 

Turner said the area hardest hit by rising vacancy rates is the city's downtown.

He said the numbers paint a pretty clear picture: there's a glut of office space in Halifax and many businesses are choosing to move out of the downtown in favor of industrial or business parks. Turner points to the Canada Revenue Agency as one example. It is preparing to move from downtown to the Bayers Lake Business Park. 

'Our downtown defines Halifax'

Business and industrial parks are "bleeding away demand from the downtown," he said. If that continues, Turner said there will be less daytime foot traffic downtown, which will hurt restaurants and other businesses that remain.

Turner thinks the municipality should decide whether it wants to let the downtown decline as a commercial centre. 

"Our downtown defines Halifax, and I think it deserves better than it's getting."  

Not everyone, however, believes downtown is on the decline. 

"The sky is not falling," said Greg Taylor, the managing director of Colliers International in Halifax. Colliers is a global commercial real estate services company and provides leasing and other services to corporations.   

Taylor said the market for office space in Halifax is soft right now, but he doesn't believe it will spell the end of the city's downtown.  

"Downtowns have been the centre for commerce and typically governance for years and years and I don't foresee anything changing that," he said. 

"What we've seen is a migration to suburban locations, but without a doubt there are still tenants and lots of them who want to be downtown."

He said the high commercial vacancy rate is just part of the normal business cycle of commercial real estate, and the market will balance itself out in due course.