Recent negative trends in office vacancy rates are starting to reverse, according to the latest rental market surveys from Turner Drake & Partners.
Saint John saw its vacancy rate drop to 16.47 per cent from 18.26 per cent year-over-year in June, while the vacancy rate in Fredericton fell to 5.55 per cent from 8.04 per cent.
But the vacancy rate in Moncton climbed to 12.92 per cent from 7.73 per cent — the largest increase among Atlantic Canadian cities.
“Moncton is a larger market and when you have a larger market you have more variation in your tenants and therefore you just increase your likelihood that some of them are going to be departing their space,” said Alexandra Baird Allen, manager of the Economic Intelligence Unit at Turner Drake & Partners.
Despite less available office space in most New Brunswick cities, the average rent price for office space went down.
The net rental rate is $13.79 per square foot in Fredericton, $12.84 in Moncton and $12.76 in Saint John.
Baird Allen said there is often a lag between what is happening with the vacancy rate and what happens with rent prices.
“Another factor is that sometimes you can have decreases in the rental rate, which will lead to a decrease in the vacancy rate because those lower rates attract new tenants,” she said.
Even though vacancy rates are starting to turn around, officials expect that will change in the year ahead as we feel the full impacts of the pandemic.
In terms of impact, Baird Allen expects there will be a two-pronged approach.
“The shift to working from home, a lot of people are really happy with that and there may be some companies that want to stick with that model and so there would be a decrease in demand for office space due to that,” she said.
“The flip side of it is that with physical distancing requirements, those people who return to the office may actually have a need for a larger amount of space per employee in order to maintain those physical distancing requirements.”
Baird Allen said there may also be a move away from the bullpen-style shared working environment model we have seen over the last dozen years or so.
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