Study shows less office space, more industrial space, available across the region

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By James Foster
Times & Transcript Staff

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The amount of office space is down and industrial space is up in Metro Moncton, according to Colliers International (Atlantic) Inc's mid-year commercial real estate report.

It's a positive report, says Tim Lyons, Colliers' regional director for New Brunswick.

"The positive growth trend that we have experienced over the past 30 months is expected to continue throughout 2008," Lyons says.

"The new office construction completed in 2007 should be occupied this year and the new multi-tenant industrial space opened in Dieppe Industrial Park and under construction in Caledonia Industrial Estates provides more choices for industrial users than they had in the past."

The busy office sector saw 76,000 square feet of office space leased since December, dropping the office vacancy rate since then by two percentage points, to 9.5 per cent. Some tenants expanded and moved to new premises but the offices they left vacant were quickly snapped up, Colliers' study shows.

And the vacancy rate is expected to continue its gradual decline as there are no major office projects currently in the works.

Those factors could prompt an increase in the current lease rates of about $26 per square foot for Class A (the best) space and $19 per square foot of Class B space.

Those figures include net rent, operating costs and property taxes and are derived from a weighted average of 3 million square feet of office space surveyed in Metro Moncton.

Industrial construction has slowed from 2007's pace.

Almost 130,000 square feet of new industrial space was added in the first six months of 2008, with most of it taking place in Caledonia Industrial Estates and Dieppe Industrial Park.

Closures and downsizing added to newly created space have also helped to add 135,000 square feet of vacant space to industrial inventories, leading to an increase in the vacancy rate of one-half of one per cent, to 7.6 per cent.

A big improvement was seen in the category of "leased" premises where vacancies fell so far this year to 11.1 per cent from 13.2 per cent.

The buying/selling market is tightening thanks to nervous investors, however local markets should still see moderate growth, putting upward pressure on rents and land values, especially in light of Metro Moncton's strong economic forecasts.

"The outlook for the balance of 2008 is for the positive trend to continue, but at a slower pace," the report states.

"Business growth from outside the area is expected to slow; however expansion among existing tenancy is anticipated to dominate leasing activity over the coming months."

Colliers International's Moncton Knowledge Report is published twice per year.