Halifax’s once dormant downtown has seen an unprecedented building boom in recent years, the likes of which rival the condo rush of Toronto. Cranes, street closures and handheld traffic signs have taken over the streetscape of Halifax’s historic core, as shiny new glass towers and contemporary facades redefine the downtown and make it unrecognizable to anyone who hasn’t visited the city in a while.
Despite the flurry of activity, pockets of the downtown are also desolate with empty office space and a multitude of “for lease” signs. More new building projects are also on the way, begging the question: Can the downtown sustain any more development?
One of the largest and most ambitious new projects under way is Armour Group’s $200-million Queen’s Marque development, a platinum LEED certified mixed-use complex on the waterfront. MacKay-Lyons Sweetapple Architects created the primary design and the overall project is led by Fowler Bauld & Mitchell Architecture.
The 450,000-square-foot project on two hectares of waterfront adds an additional 120,000 square feet of office space to the downtown. It will also have room for shops, restaurants, a boutique hotel, apartments and 75,000 square feet of public space that features a central plaza, natural amphitheatre on a pier, and a climbable light installation.
A recent Colliers International commercial real estate report says the Queen’s Marque project is a promising sign of economic growth over the next several years, but also cites sky-high office vacancy rates in downtown Halifax: 20 per cent in the first quarter of 2018, up slightly from 19 per cent in the previous quarter and part of a rising trend since 2010. A balanced market has a vacancy rate of 5 to 6 per cent.
The Colliers’ report says the glut is largely a result of unoccupied workspace downtown, which makes up about half of all vacant office space in the Halifax Regional Municipality. Vacancy is expected to decrease in the short term but turn around and increase again as new supply comes online.
Greg Taylor, managing director of Colliers International in Halifax, predicts the demand for downtown office space will catch up to meet the supply in the next three to five years.
“We’re in a trough of the supply-demand cycle and it’ll get back to that economic equilibrium, and then the market will no doubt get tight again,” Mr. Taylor said.
“These projects are kind of like oil tankers: Once you start it, you don’t stop and it takes a long time to change direction on them. Really, what you’re thinking is: By the time you get it built and by the time you’re ready to hit the market, the market will catch up to you.”
Queen’s Marque is to be completed in December of 2020.
The remaining change in occupied space as a result of companies moving into new digs (or net absorption) in downtown Halifax dropped slightly in the first quarter of 2018 compared with the last one.
Two major tenants at Purdy’s Wharf, a harbour-front twin-office tower complex built in 1990, are jumping ship to move to the Queen’s Marque development.
The large Atlantic Canadian law firm Stewart McKelvey will take over three-quarters of the commercial space in the Queen’s Marque building.
Halifax’s Deloitte office is also trading up and in so doing is reducing its office footprint by 20 per cent when it moves into the top two floors of the Queen’s Marque development, said Atlantic managing partner Mathew Harris.
“There’s a real demand for talent and the new professional today expects a different workplace,” said Mr. Harris, citing team work spaces with the latest technology and natural light. “The old days of lining the outside of your offices with individual offices and having a bullpen in the middle are gone.”
Real estate service CBRE Ltd. takes a buoyant view on downtown Halifax’s soaring office vacancy rate, looking closer at the age of available office space and today’s growing demand for newer, more functional Class A work space with natural light and amenities such as bike racks and shower facilities.
CBRE senior vice-president Robert Mussett, also in Halifax, points to inventory charts that show the vast majority of downtown Halifax’s office vacancy is out of date, existing in Class B and C. When compared with cities across the country, Halifax has the most Class B office space at 59 per cent. London, Ont., follows at 49 per cent and Montreal at 42 per cent.
“Not only do we want more development downtown, we need it,” said Mr. Mussett. “Halifax in some ways is under demolished. It’s stock that is really antiquated space. Maybe it shouldn’t even be there.”
CBRE’s 2018 first-quarter market research report points out that as new Class A supply comes online, the demand for more modern and efficient work spaces will become much higher. Tenants will shift to better locations in Halifax’s cost-sensitive market, forcing landlords who want to stay competitive to upgrade their current spaces, offer incentives and adjust rent prices, the report said.
“No matter what industry you’re in today, the biggest issue is talent. We have got to figure out how to recruit and maintain our talent,” Mr. Mussett said.
“Part of that retention is adopting a workplace strategy that includes office design that is focused on the employee experience with attention to connection, mobility and wellness, and in that, light and fresh air are critical.”
– Queen’s Marque will include about 900 tonnes of Nova Scotia sandstone slabs excavated from Wallace Quarries on the north shore of the province.
– The primary heating and cooling systems will use heat- pump and chilled-beam technology, where seawater is drawn from the harbour and circulated throughout the buildings.
– Nova Scotia granite steps that descend into the harbour reimagine the site’s historic slipway, formerly called Queen’s Landing.
– The north and south wharf buildings are meant to be emblematic of ships docking on the waterfront.
– At the apex of the rising pier building, an as-yet-to-be-designed and named “harbour light” art installation will be built, a glowing tower which people can enter and climb.