By CBRE Limited
The Halifax industrial availability rate increased 90 basis points (bps) from 5.6 per cent to 6.5 per cent. This increase was mainly driven by 91,555 sq.ft. of new supply coming onto the market during the quarter.
In the Dartmouth submarket the availability rate increased from 5.8 per cent to 6.9 per cent while all other submarkets, including Halifax, Sackville and Bedford saw only minor shifts in availability. The Halifax submarket continues to see the lowest availability rate at 3.4 per cent.
Overall there was 15,216 sq.ft. of negative absorption in the Halifax industrial market this quarter. This is well below the first quarter of 2011 when the industrial market recorded 49,183 sq.ft. of positive absorption. Compared to the fourth quarter of 2011, when there was 64,531 sq.ft. of positive absorption, absorption has decreased significantly. However, this can be linked to the new supply coming onto the market as the majority of the negative absorption was in the Dartmouth market where there was 91,555 sq.ft. of new supply. Expect increased activity in the coming quarters, as suppliers are getting ready in anticipation of increased demand stemming from the navy shipbuilding contract.
There was no new construction started this quarter. Construction continues on an 18,000 sq.ft. building on Wilkinson Avenue in the Burnside Business Park and should be completed by next quarter. HOOPP Realty Inc. completed their new industrial building at 130 John Savage Avenue. The total building size is 91,555 sq.ft., which is more than half leased by two large tenants: SNC-Lavalin and Iron Mountain Canada Corporation.
Net rental rates continued to rise slowly from $7.35 psf last quarter to $7.38 psf. Historically, the industrial market has seen only minor shifts in net rental rates due to the steady nature of the market. For example, the overall Halifax industrial rate has only increased 3.7 per cent over two years as the overall net rental rate was $7.11 psf in the first quarter of 2010.
The unemployment rate in Halifax was 5.9 per cent in the first quarter of 2012, compared to 5.5 per cent last quarter. This is low compared to markets such as Toronto, Montreal and Vancouver, which had unemployment rates of 8.6 per cent, 9.2 per cent and 6.6 per cent, respectively. Halifax has historically experienced a low unemployment rate compared to other markets and the national average.
The availability rate increased this quarter from 5.6 per cent in the fourth quarter of 2011 to 6.5 per cent this quarter, which was due to new supply being added to the market. Sublet space accounts for 13.3 per cent of all vacant space in the Halifax industrial market. The availability rate in the Dartmouth, Halifax, Bedford, and Sackville submarkets is 6.9 per cent, 3.4 per cent, 6.6 per cent, and 16.3 per cent, respectively.
Overall net rental rates continue to rise in the Halifax industrial market from $7.35 psf last quarter to $7.38 psf. There was no rental rate change in the Bedford and Sackville submarkets. On the other hand, the Dartmouth submarket saw an increase in average net rents from $6.93 psf last quarter to $6.97 psf.
There was 15,216 sq.ft. of negative absorption this quarter in the Halifax industrial market, which was mostly in the Dartmouth submarket.
Reprinted from the First Quarter 2012 Marketview of the Halifax Market Quarterly Report released by CBRE Limited, Atlantic Canada.