Halifax, it seems, is running out of room. The big problem is a lack of top-notch commercial real estate in the city’s centre. This lack of availability is a concern for a municipality trying to revitalize its downtown, as well as for a province trying to woo new enterprises with the promise of a better place to do business.

The extent of the problem seems significant. One real estate developer recently stated that the commercial vacancy rate is roughly 4% for both Class A and Class B space. This doesn’t leave a lot of wiggle room.

It also comes as a surprise. Halifax, like most cities in the country, is used to the natural ebb and flow of commercial tenants. But unlike many urban centres in Canada, Nova Scotia’s capital has not had a big construction boom since the mid-1980s, according to Tim Margolian, vice president of investment sales for J.J. Barnicke Atlantic Ltd.

Margonlian’s concern is shared. In a presentation to city council, Fred Morley, chief economist with the Greater Halifax Partnership, the city’s economic growth agency, noted that the city faces several key challenges — and inadequate office space is among them.

Commercial development in the downtown has always been a touchy issue. Historically, there have been two divergent points of view. On one hand, developers with an eye to future revenue have been keen to build “it” so “they” will come. On the other, history buffs, lifestyle enthusiasts and others have been keen to have “it” built outside the downtown — if at all — in order to preserve Halifax’s beauty and, in particular, protect the highly valued view from Citadel Hill.

The most recent clash between the two groups came over a proposed development that clearly proved no one was seeing eye to eye. The newest mega-storey development to get the stamp of approval from Halifax City Council came after more than three hours of heated debate at City Hall.

In the end, United Gulf Developments Inc. got the go-ahead for a 27-storey twin-tower development dubbed the “Twisted Sisters.” The project, which will call the old Tex Park garage on the corner of Granville and Hollis streets home, is being hailed either as the first step in a revitalized downtown or as the final nail in the coffin of a unique and picturesque city centre. Specifically, critics are concerned that the development, which boasts a hotel, commercial space and condominiums, will ruin the view of historic Halifax Harbour from equally historic Citadel Hill. The towers are slated to hit 88 metres, taller than the National Historic Site that looms over the downtown.

It appears that the skirmishing may now be over. City councillors, who voted in favour of the $150-million initiative, found their process questioned — and ultimately endorsed — by the Supreme Court of Nova Scotia. Then, as 2007 was winding down, the Public Utility and Review Board gave the project the green light it ultimately needed. Or killed the city as Haligonians know and love it, depending on your point of view.

One thing everyone seems to agree on, though, is that more commercial space is needed. That demand is going to get even greater as Nova Scotia continues to court successfully global financial services firms to the city and as those firms rapidly expand.

Bermuda-based Citco Fund Services opened its doors in Halifax last year with five staff members. The firm now has 40 employees in the office. New York-based Marsh Captive Solutions had only one employee in its Halifax office when it set up shop in 2006. It now has 40 — and that number is expected to hit upward of 150.

And all these employees will need some place to work — preferably downtown. IE