The Future of Halifax Commercial Real Estate Is Flexible
13 Nov 2019
Co-working needed in Atlantic Canada for businesses to succeed and attract talent
While the rise of flexible workspace is transforming Canada’s major markets, the co-working concept has yet to be embraced in Atlantic Canada. Heading into 2020, businesses seeking to succeed must look at adopting flexible real estate models. “A realistic assessment of office tenant needs should include flexible workplace options, and local landlords will be forced to think outside the box in 2020,” CBRE Atlantic Region Vice President Andrew Bergen told today’s Halifax Market Outlook Breakfast. “Co-working is coming and it’s only a matter of when.”
Tech incubators in Halifax are producing expanding businesses in need of permanent office space. But these growing companies may not have the upfront capital to invest in a long-term office solution, or the traditional office model doesn’t fit with their culture. Forecasting future growth for scaling companies is tough: what may start out as a 1,200 sq. ft. workplace requirement in year one may be a 12,000 sq. ft. requirement by year five. “Locking into a long-term lease with significant upfront construction costs is not a favourable option for many companies today,” Bergen said. “The business case for a large co-working provider establishing a presence in Halifax should be taken seriously.”
Tenants and landlords are having to adjust, with flexibility now at the core of all negotiations. Square footage and price are not the only factors being considered when selecting a new location. “A workplace that promotes company culture and lifestyle as a differentiator is a priority,” said Bergen. “A strategic real estate model tailored to embrace flexibility and attract and retain top talent will reduce turnover and overall costs, while accommodating future growth strategies.”
Here’s what else CBRE will be watching for in Halifax commercial real estate in 2020 and beyond:
- Jobs will drive multifamily growth: Halifax’s GDP is forecast to hit $22.5 billion by 2021, with 2.9% annual growth. Overall apartment vacancy, currently at 1.6%, is expected to remain low as the downtown residential rental market continues to thrive.
- Opportunities abound: Additional investment activity and capital re-allocation will create significant movement within the multifamily segment. Some large institutional owners will choose to divest and exit the market amid historic highs in rental rates and attractive returns. “The stars have aligned,” Bergen said. “Existing and new entrants are seeing new scalable opportunities for quality asset portfolios in a traditionally risk-averse investment landscape.”
- Retaining talent will be critical: With a population of 431,000, Halifax grew by 1.6% in 2018 and will continue to expand at a faster pace than the Canadian average. Since 2016 over 50% of Halifax’s net population growth was young people aged between 25 to 39. In a region that has grown used to losing its young skilled workers, the pressure to retain talent will remain one of the most critical challenges moving forward.
- Migration momentum: Over 60% of Halifax’s population growth is the direct result of immigration. The city is quickly becoming an international destination as new residents continue to flock here seeking employment, which bodes well for all sectors, Bergen said. “Attracting foreign residents is critical to the future state of this region. And providing businesses with the best talent will be vital to our city’s short- and long-term economic health.”
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
In Canada, CBRE Limited employs 2,200 people in 22 locations from coast to coast. Please visit our website at www.cbre.ca.