Fredericton’s south core policy plan and New Brunswick’s rental housing market

First National provided the construction financing for CG Group’s Millenium Blvd development in Moncton. An example of modern multi-unit construction, the project reflects how scale, planning, and thoughtful capital structuring are making new rental supply feasible. (photo courtesy of CG Group).

Fredericton City Council’s recent approval of a higher density South Core Plan unlocks new potential for purpose-built rental development in the provincial capital by allowing rezoning applications for buildings up to 15 storeys along major downtown corridors.

This policy change for the city’s south core is promising for the future growth of Fredericton. It unlocks new opportunities for multi-unit housing developers for projects that might otherwise not be feasible on tight land economics. In the long view, this policy change will help pave the way for a doubling of downtown population, 3,200 new housing units for 6,000 new residents, all within walking distance of transit, workplaces, and amenities.

However, despite this positive policy environment, the last year has brought signs of softening in New Brunswick’s rental market. Population growth, driven primarily by immigration and interprovincial migration, has started to flatten. This is creating concern among apartment developers and owners as thousands of new units come to market, and absorption slows.

Taking a long-term, localized approach is imperative

While the landscape is shifting, developers who continue to move forward must focus on quality over quantity. In Moncton, for example, many developers are differentiating themselves through mixed-use rental projects that integrate retail and daily conveniences for residents. Others are embracing modular and prefabricated construction, a method proving to be both high quality and cost effective compared to traditional on-site builds.

To mitigate financial risks in today’s market, developers should take a portfolio-level approach that takes into account the full lifecycle of a project from construction through lease-up. Overbuilding in any one submarket could prove costly if population growth stabilizes.

Equally important is understanding who you are building for. A one-size-fits-all approach increases risk. In Fredericton, for example, affordability remains key given the concentration of students and public-sector employees. In Saint John, where much of the housing stock is older, new rental projects can achieve strong absorption simply by offering modern design and amenities.

Working with government to incentivize pro-growth policies

Despite near-term headwinds, New Brunswick is moving in the right direction with pro-development policies. The 100 percent rebate of the provincial portion of HST, in addition to the federal government’s HST removal on new PBRs, has been a meaningful incentive for developers.

The industry has also welcomed the  Housing Development Incentive Program, which provides tax incentives for new rental units in existing and new buildings. Combined with low development fees and relatively quick approval timelines, typically four to six months, New Brunswick continues to offer one of the more efficient environments for new construction in Canada.

While all these government policies and collaborations are making it more feasible for developers and asset owners to increase rental supply, overlooking existing underlying constraints could be costly. These include:

• High property taxes, which are the highest multi-residential rates in Atlantic Canada.

• Density restrictions in Moncton and Saint John, where municipalities could benefit. from following Fredericton’s lead in allowing greater density downtown.

• Labour shortages, as the province must continue investing in training and attracting skilled trades to keep construction costs competitive.

Focusing on quality over quantity will define long-term success

New Brunswick’s rapid population growth between 2021 and 2024, the fastest since the 1970s, was largely driven by international immigration and an influx of residents from Ontario seeking affordability. This surge fueled construction booms in Fredericton, Moncton, and Saint John, with Moncton leading the way. The city’s 1.5 percent vacancy rate reflects a strong tech and service economy, drawing younger residents and professionals.

According to CMHC, as of late 2024, New Brunswick’s overall vacancy rate stood at around 2 percent, confirming a strong rental market province wide. While vacancy may tick up in the short term, this moderation should bring the market back toward a healthier balance of supply and demand.

Ultimately, focusing on project quality, sound financial structuring, and deep market understanding will ensure resilience through these cycles. The fundamentals behind New Brunswick’s rental market remain promising. The province is building the right policies and the right momentum for sustainable long-term growth.

About Jeremie Leblanc, Director, Commercial Lending, First National Financial LP

As part of Canada’s largest non-bank lender and CMHC experts, Jeremie works with an industry-leading team that lends billions of dollars annually to commercial real estate projects across Canada. Prior to joining First National, Jeremie spent nearly two decades in mortgage lending and housing. Seventeen of those years were with CMHC, where he held progressive roles in underwriting, business development, research, and multi-unit direct lending.

At First National, Jeremie brings tremendous expertise in the apartment sector including CMHC’s underwriting approach and risk appetite to his clients, and deep local insight into housing markets, real estate financing, and affordable housing. These perspectives allow him to set realistic expectations, structure deals with precision, anticipate challenges, and deliver solutions that align with client objectives.

Jeremie holds the Certified in Real Estate Finance (CRF) designation from the Real Estate Institute of Canada (REIC). He is a past Board Member and Treasurer of REIC’s Nova Scotia Chapter and previously served on the Board of the Nova Scotia Home Builders’ Association.

He can be reached at jeremie.leblanc@firstnational.ca