Increased military spending is boosting commercial real estate activity in Halifax, says a leading local broker.

Craig Snow, co-owner of Remax Nova, told Connect that increased federal spending on military development projects and corresponding private investments are spurring deals in diverse asset classes across the region. Proposed development projects on military lands are making an impact on their own while touching commercial real estate sectors ranging from multi-family to light industrial, office and infrastructure.

Consequently, Snow is feeling “very positive” about the Halifax CRE market as a whole

“We’re now expecting to see another little bit of a boost to our population growth, and this would be not so much on the immigration side but more migration from within Canada of suppliers and trades and skilled labour coming into our area to satisfy these contracts that are going to be raised by the Canadian military for their infrastructure spending,” he said.

Commercial real estate investors tend to regard population increases as key investment benchmarks.

Ottawa is reactivating Halifax-area federal lands that were once deemed surplus while also acquiring lands from other parties as Prime Minister Paul Carney seeks to boost Canadian military spending to 5% of GDP by 2035 to comply with NATO guidelines and decrease Canada’s procurement of American military equipment amid ongoing trade tensions with the U.S. Carney also aims to boost investment in Canadian manufacturing and give this country more sovereignty over critical assets.

The federal government’s Halifax-area investments include the $82.5-million acquisition of a 425-acre property known as Halifax Gate. The former oil refinery was previously owned by Texas-based Valero Energy. According to Darren Fisher, MP for Dartmouth-Coal Harbour, the acquisition will support current and future Royal Canadian Navy operations, including the movement of personnel, ships and supplies.

Lauren White, a CBRE executive vice-president with the company’s land services group, said on LinkedIn that Halifax Gate in Dartmouth, N.S., provides an opportunity to build more than 6.5 million square feet of density, “allowing for a significant industrial development.” CBRE represented Valero in the transaction.

The federal government has also invested $60 million in the development of a a 140-unit apartment complex for Canadian Armed Forces members near 12 Wing Shearwater.

Ottawa is also investing $1.2 billion to modernize power and municipal infrastructure at CFB Halifax Dockyard and its nearby Stadacona headquarters, $648 million for two new aviation support facilities at 14 Wing Greenwood, and more than $180 million for a combatant training and integration centre.

Halifax also continues to benefit from billions in ongoing development contracts tied to Canada’s long-term shipbuilding strategy.

As a result, demand for warehouse and office space is increasing, along with interest in other assets, said Snow. The local office space is also gaining from the burgeoning return-to-office movement prevalent across Canada. Office absorption is increasing but the uptick primarily involves existing space rather than new builds, he noted.

Meanwhile, office vacancy is decreasing but unlikely to dip below double-digit levels in the near future, staying in the 10% to 12% range, he said. Some new office projects are underway in downtown Halifax and expected to come onto the market in 12 to 24 months.

The multi-family sector remains strong as institutional investors from across Canada look to acquire stabilized assets rather than invest in forward-sales projects amid “some” rental-rate pressure in downtown Halifax and a scarcity of surplus military spending.

As the region’s CRE activity picks up, the market’s image is also changing as institutional investors exhibit strong demand for Halifax-area properties but keep their pens down elsewhere in Canada, according to Snow.

“Halifax and and the Atlantic region are [traditionally] looked at as secondary markets and now are quickly being looked at from most of the larger investment firms across the country as almost a primary market for their interest levels because of the way the market seems to be going,” he said. “I think, eventually [Halifax] won’t be looked at as a secondary market.”

He added that a considerable amount of new supply is being delivered and many construction stars are occurring.

Foreign investors, particularly those from the Middle East and India are also displaying strong appetite for the region’s commercial real estate, he added.

Remax Nova owns and operates five brokerages in the Halifax area.

Pictured: Downtown Halifax

Image: Halifax Partnerships

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