EDITED BY STAFF, TRANSCONTINENTAL MEDIA
The Nova Scotia Business Journal
The year end total vacancy rate for central Halifax is a mere 3.5 per cent, which adds fuel to the debate of the need for new development in downtown Halifax.
The Armour Group’s Waterside Centre, which would have created 80,000 square feet of new office space, was rejected by a controversial decision by the Halifax Regional Municipality. The Armour Group will be appealing the HRM council’s decision set to be heard this month. The rejection further ignited the discussion on the need for growth versus the desire to preserve.
Sublet space in Purdy’s Wharf and Bank of Montreal Tower contributed to a negative fourth quarter absorption for the central submarket.
Unlike the limited availability in the central submarket, the suburban market added 206,000 square feet of new inventory this quarter. The Class A, five storey, Bayers Road Tower, adjoins the Class B service centre which was converted from retail and now contains medical and engineering offices as well as Capital District Health space. The addition of the new tower has increased the direct vacancy from nine to 22.8 per cent for Halifax Suburban Class A.
Helping to offset the total vacancy rate is the leasing activity at 30 Solutions Drive in the former x-wave building. Level one of the building has been converted to multi-tenant occupancy and is 100 per cent re-leased.
New construction in Dartmouth has broken ground in Highfield Park, where the aerospace and defense contractor Lockheed Martin will take up to 100,000 square feet over a 10 year period in the new 150,000 square foot, four-storey building.
Despite the deficit, the province and the HRM are working on a plan for a new 150,000 square foot convention centre area, and six proposals are being reviewed. Nova Scotia Power has received the green light for a new $53.4-million headquarters on Lower Water Street. The plans are to renovate the former Electropolis space and adjacent former generating station to create an 110,000 square foot headquarters by 2011 for its operations and its parent company Emera.
Looking ahead, the forecast calls for the vacancy rate to decrease in Suburban Halifax over the next year as tenants move into the Bayers Road Tower. Inventory will increase in 2009 with the completion of the Lockheed Martin building in Highfield Park. The next step for HRMbyDesign is for HRM Council to hold a public hearing on setting height restrictions, which will set the city’s framework for redeveloping the downtown over the next 25 years.
Industrial Market Overview
Several new vacancies in the Burnside Industrial Park have attributed to a negative absorption for the final quarter of 2008. Two new vacancies on Gurholt as well, make up the majority of the negative 66,624 square foot absorption recorded.
The year-end absorption was a positive 113,282 square feet. The direct vacancy rate is down from 8.1 per cent in December 2007 to 6.5 per cent at the end of 2008. Weighted average rental rates fluctuated only slightly from the first quarter; $6.43 average asking rate in March 2008 up to $6.50 for the second and third quarters, closing at $6.41 net for the fourth quarter.
Mathers Freight Management Limited, a division of IH Mathers & Sons, built a new 25,000 square foot warehouse on a five-acre lot in the Burnside Logistics Park. Mathers’ 13,000 square foot building on Pettipas Drive is now on the market.
Consolidated Fastfrate is going after local businesses to fill its Burnside warehouse. The national logistics firm advertised 30,000 square feet at its 65,000 square foot bonded warehouse. The seasonal nature of Fastfrate’s business is one of the reasons to look for new customers. They wouldn’t rule out the idea of sub-leasing the space, but the intention was not to become landlords.
A leading Canadian naval engineering and technical services company is expanding in Halifax. Fleetway Inc. will create up to 100 new jobs within five years. Fleetway, a part of the Irving Group, serves major clients in the Canadian defence, shipbuilding, oil and gas, and other sectors.
A conditional purchase and sale agreement is in place for the acquisition of a massive tract of land at Bayers Lake Business Park. It has been previously stated that the plan for the 88 acres behind Kent Building Supplies on Chain Lake Drive is to build a power centre on the undeveloped bush and scrub land.
Halifax Regional Council has approved in principle the functional plan for the municipality’s business parks as presented by the consultant. The Business Parks Functional Plan is one of the mechanisms for implementing HRM’s Regional Municipal Planning Strategy, which was approved in 2006. The Business Parks Functional Plan (BPFP) serves as a strategic plan for the future expansion of business parks and ensuring adequate supply of industrial lands within HRM.
Looking ahead, the industrial sector is expecting a number of recently announced major projects: the construction of the Melford Container Terminal and the refitting of seven of Canada’s 12 navy frigates will help the Nova Scotian economy in 2009. Nova Scotians will have better highways and improved water supply and more broadband accessibility after the federal and provincial governments recently announced infrastructure funding.
The rise and fall of interest rates, fuel prices and the Canadian dollar means that builders and buyers will be more cautious in 2009.
Reprinted from the fourth quarter report of Cushman & Wakefield LePage’s 2008 Office & Industrial Market Statistics.