The Atlantic region needs to attract more companies to fill empty office space as landlords battle for the same number of tenants, delegates at a real estate conference heard Tuesday.
Todd Bechard, Atlantic region executive vice-president for Cominar REIT, said during a panel discussion at the Atlantic Real Estate Forum in Halifax that more work needs to be done to attract new tenants to the region.
“That’s the opportunity we need to be (looking at) more and more, is to try and bring new tenants into these markets, because literally we’re all stealing (from each other). We’re talking about the Nova Centre. Well, they better bring in tenants from outside because, otherwise, you’re stealing from everybody else.”
The competition for new tenants is particularly fierce in Halifax, as suburban landlords vie to fill new space in sprawling new developments, while downtown owners are looking to keep pace.
According to a recent CBRE Ltd. report, overall vacancy in Halifax was 9.7 per cent in the first quarter.
The downtown rate fell to 10.3 per cent, while the suburban rate rose to 9.2 per cent from the previous quarter.
A humorous exchange between Barry Stockall of Crombie REIT and William Hardman of Hardman Group highlighted how competitive the office market is in Halifax.
Speaking about tenants’ desire for amenities such security and parking space, Stockall, senior director of office leasing at Crombie, noted how much work is being done to compete with the suburban market.
“The more you give them, the easier it gets to lease the space. The lobbies, the buildings, are being constantly upgraded to try to compete with Bill and his new buildings now in Burnside (Park). You’ve got to be pretty sharp,” Stockall said, referring to the new $50-million business campus at the corner of Wright Avenue and Burnside Drive that Hardman Group is developing.
“We haven’t stolen any of your (tenants) yet,” Hardman said.
“And you’re not going to, either,” Stockall replied, eliciting laughs from the room.
Halifax Developments Ltd., owned and managed by Sobey family-controlled Crombie REIT, is planning to build a three-storey addition to Scotia Square between Barrington Tower and the Delta Halifax.
Earlier this year, the company also received approval to build another three-storey, 100,000-square-foot addition of class A office space dubbed Westhill on Duke at the corner of Duke and Albemarle streets.
Hardman said tenants’ preference to relocate to the suburbs stem from their need for buildings that offer new amenities that also promise lower operating costs, something that has been lacking downtown until recently.
“We look at it and say that it’s really an evolution of choices for tenants,” he said.
“You have a market in Halifax that has not seen a lot of new product. And so when you do, all of a sudden, have a new product that comes into the market, it gives tenants a choice to finally see something that’s brand new, that has a number of bells and whistles.”
But Hardman said with work underway on the Nova Centre, the TD Centre expansion and the RBC Waterside Centre, downtown Halifax is on the verge of a comeback, creating a more balanced environment.