Halifax Office and Industrial Real Estate Market: Leader in Q4 2024

The Eastern Canada commercial real estate market is navigating a period of early recovery, with key office and industrial indicators reflecting both resilience and emerging challenges. In Q4 2024, while the national office market posted its first year of positive net absorption since 2019, and the Canadian industrial vacancy rates remain elevated, Halifax has stood out, showing notable strength. 

Office Market Trends

Across Canada, the office market started to recover in 2024, driven by the landmark achievement of positive net absorption for the first time since 2019. Despite this encouraging development, the national office vacancy rate lingered at 18.7%, underscoring persistent oversupply issues and cautious leasing activity. These mixed signals highlight that, while demand is gradually returning, the market is still in the early stages of rebalancing after years of elevated vacancies. 

Halifax: Regional Success Story

Halifax emerged as a standout market in Eastern Canada during Q4 2024. The city recorded one of its strongest quarters on record, with approximately 145,000 square feet of positive net absorption. Notably, the downtown submarket outperformed its suburban counterpart for the first time in 2024, signalling a renewed interest in central, urban office locations. Vacancy rates in Halifax were particularly encouraging. Overall, the market reported a vacancy rate of 12.3%, with downtown figures benefiting from a significant 200 basis point decrease in vacancy compared to the previous quarter. In addition, suburban vacancies also improved, reflecting a broad-based recovery across the region. 

Class A office spaces in Halifax have been a key driver of this performance. With a vacancy rate at an eight-year low of 14.1%, premium assets continue to attract quality tenants. This trend is also reflected in the rental figures, where average Class A net rents reached $19.71 per square foot in the downtown core, compared to $16.92 per square foot in suburban areas. 

The low proportion of sublet space – just 1.6% downtown and 1.0% in the suburbs – indicates a stable tenant base and a market less reliant on short-term lease adjustments. 

Furthermore, the suburban market witnessed 30,000 square feet of office space under construction, all of which was fully pre-leased, suggesting strong demand even outside the urban core. 

Industrial Market Trends

On the industrial front, the broader Canadian market experienced notable changes in Q4 2024. The national industrial availability rate increased to 4.8%, reaching levels not seen in nearly eight years, driven in part by a surge in new supply. Cumulative net absorption for the year reached 1.4 million square feet, indicating that while new industrial stock is adding to overall availability, market absorption remains positive. 

Halifax: Record-Breaking Quarter

Halifax’s industrial market continued to break records in 2024, marking a fourth consecutive quarter of robust new supply. This quarter alone, 309,055 square feet of state‐of‐the‐art industrial space was delivered to the market, contributing heavily to the record-setting total of 1.2 million square feet of new product introduced throughout the year.

The influx of new inventory has driven the market’s availability rate up to 7.9% by quarter-end. The CBRE notes that without this recent surge in supply, the underlying availability would have been as low as 3.1%, indicating that slowed pre-leasing on the new spaces is providing some much-needed relief to the market.

Despite the high level of new supply, the market is showing positive absorption dynamics with net absorption reaching 93,000 square feet. This solid uptake is complemented by an active development pipeline, with 101,000 square feet of space currently under construction in the Dartmouth submarket. Meanwhile, net asking rental rates have also shown resilience, climbing by $0.50 quarter-over-quarter to settle at $12.52 per square foot.

These developments, including key projects like the new Midland Terminal at 800 Wilkinson Avenue and the completion of the Bayers Lake Industrial Centre at 125 Julius Boulevard, reinforce Halifax’s dynamic development year. 

Joanna Gerber