Data shows growth in demand for Saint John office space
Recent survey from Turner Drake & Partners show vacancy rate fell below 20 per cent for first time in 6 years
A recent survey of commercial real estate shows that while Saint John continues to have the highest vacancy rate in Atlantic Canada, the city's market may slowly be gaining momentum.
The data comes from commercial real estate consulting firm Turner Drake & Partners Ltd., which regularly compiles data on office space inventory on Atlantic Canadian cities.
According to its latest report, the amount of office inventory in Saint John fell below 20 per cent for the first time in six years in 2017, while Fredericton has the lowest office vacancy rate out of any of major Atlantic Canadian city in the same year.
Moncton also saw office vacancy drop, from its peak of just over 16 per cent in 2016 to about 13 per cent in 2017.
Sign of growth
Steve Carson, the CEO of Develop SJ, said he thinks the increase in the demand for office space is being driven by growing companies, particularly in creative fields and IT, that are situated in the city's uptown.
Develop SJ is the former real estate arm of the City of Saint John.
Carson said that Saint John's wealth of heritage buildings with features like brick has proven to be attractive to these types of companies.
"Creative minds want to be in creative spaces," he said, using Saint John's Brick Park cluster as an example.
Brick Park is the name for the 30 information technology, telecommunications, and creative industry companies that are housed close to each other in Saint John's myriad brick heritage buildings in the uptown core.
"Saint John doesn't have a knowledge park per se, but I think we have something more compelling for knowledge workers in this kind of heritage, Brick Park cluster that we have," he said.
"Knowledge workers want to be in a place where there's waterfront, pubs, bricks, beams, galleries. It's really this sort of ecosystem that's evolving in the core of our community that is leading a lot of this growth and attracting new companies to be a part of it."
Large backlog remains
However, Ian McCoy, director of investment attraction for Enterprise Saint John, said the market in Saint John's uptown has been stable for some time.
He said the city's office space vacancy rate ballooned above 20 per cent because Aliant pulled out of Brunswick Square's office tower, and the Peel Plaza justice complex resulted in a large chunk of City Hall emptying out.
"That's what sort of created the backlog of inventory that we have, and it's going to take quite a bit of time to re-absorb that," he said.
He added that with the completion of the Irving Oil headquarters, the emptying of the company's offices will probably cause another spike in the city's vacancy rates.
That being said, having a high office vacancy rate in Saint John is not necessarily a bad thing.
"We see it as an opportunity, because we have a couple buildings with large floor plates that can put a large chunk of continuous space in the downtown core," he said.
"And not a lot of cities can do that."
Stable in Fredericton
In Fredericton, the office space vacancy rate has hovered around 10 per cent for the last three years.
Mayor Mike O'Brien said the city was slightly overbuilt in previous years, but space seems to have filled up.
"The demand had been filled, so there wasn't a big push for more office space in the last couple of years," he said.
"Our office space, the businesses that are here, the financial-type of businesses that are here are very stable, it's not just a boom and bust."