The increase in absorption over the last quarter has resulted in just over a 50-basis point decrease in vacancy from 7.5 per cent to 6.9 per cent.
We have, however, seen the average asking net rental rate decrease from $10.61 PSF to $10.20 PSF.
The increase in absorption over the last quarter has resulted in just over a 50-basis point decrease in vacancy from 7.5 per cent to 6.9 per cent.
We have, however, seen the average asking net rental rate decrease from $10.61 PSF to $10.20 PSF.
My favourites are old malls. Once so bustling and now so neglected.
But what if you were looking at a vacant mall that was brand new?
Earlier this week, I forwarded a client some historical data on Saskatoon commercial real estate capitalization rates. He came back to me with the comment, “Would be interesting how it (cap rate information) trends with interest rates.”
Sophisticated investors absorb data to make informed investment decisions. I asked our Market Analyst to gather the information. Here’s my observations because of that research.
What factors need to be considered to make a prudent investment decision?
I wrote about the advantages of partnerships, but let’s say the idea of a partnership does not interest you.
We represent both Tenants and Landlords; this article has been written from the perspective that I am representing the Landlord.
At times the Tenant is prepared to execute the document “as is” and at times they will request hundreds or more of changes. We have seen request that number exceed 1,000 changes.
We know all commercial real estate leases are written with a bias towards the Landlord, but what are the main reasons that Tenants object to the document?
We did see some new construction of retail in 2018, so it’s probably time to revaluate where the inventory levels sit versus vacancy, midway to the end of the third quarter of 2018.
Looking at the numbers by area, who do you ask: landlords or tenants?
All of these can be useful, however there are times when they just cannot replace a “belly to belly” meeting.
When a tenant vacates a space it can be difficult to anticipate who might backfill them based on the uses the property is best suited for.
So how do landlords decide if they should and shouldn’t spend money on a vacancy in order to get it leased up?
Times when a story can be framed negatively or positively when viewed through the lens of reality.
Here’s the thing, the latest Marquis Industrial Building Permit Map issued by the City of Saskatoon on July 3, 2018 states there have been no industrial building permits issued in 2018 (within the Marquis Industrial area).
On the surface, that’s a hard pill to swallow!
Unlike a sale, where both sides part ways at the end of transaction, I think leasing is a lot about building a relationship.
However, much like in our personal lives, we all know some relationships are just not meant to be.
There is nothing worse than putting a transaction together that gets mired in a lengthy conditional period with no end in sight.
Whether it’s a court ordered sale or a deal that continually seems to get extended, time kills deals that take too long. Continue Reading
It certainly doesn’t seem like it’s been 3 ½ years since our current ownership group purchased the company. A great deal has happened. The growth and success we’ve experienced over that period of time is because of the great people we work with.
When we began this process we spent a lot of time thinking about: Why we do what we do?
The purpose of this story is to answer that question.
It seems like unlikely odds, Saskatchewan Liquor and Gaming Authority announced that all businesses awarded a cannabis retail permit were selected at random.
A University of Regina statistics professor told the Leader-Post that he’s calculated the odds of one company winning permits in four locations is a one in 1,319,760 chance.
I explain that our typical fee would be calculated based on five percent of the total net rental amount over first five years of the lease term and, if applicable, three percent on the balance (plus taxes).
In many cases the conversation ends there.
Every now and then however I get a new doozy worth sharing!
I’ve compiled a list of new and interesting ways that tenants have chosen to compromise their relationship with their landlord.
I had come to the realization after a period of overseas travel that we were incredibly fortunate to live in Canada.
Over a year ago, it was announced the Regina’s downtown Cornwall Centre was getting an H&M store.
The store opened this past weekend to a lineup of folks hoping to cash in on door crasher coupons between $10 and $300.
So why did it take so long to finally open the doors?
Unfortunately, we have encountered problems similar to this in the past.
My Business Manager received a call from an individual who is purchasing a multi-tenant commercial property. We are the Listing Broker and this Buyer is represented by an Agent from another brokerage firm.
The Buyer was very frustrated with their Agent and wanted to know how they could proceed without him.
So what’s this ongoing problem I’m referring to?
They are fervently shopping for locations which I feel like may be premature.
Is the province really prepared for this? I’m not sure any part of Canada is.
The Saskatchewan provincial government expanded PST in the 2017 budget to include restaurant meals.
Has it made any impact on spending habits? Statistics so far indicate perhaps.
The timing is especially interesting as the City recently commissioned a report regarding the feasibility of a downtown arena.
Could this be part of a bigger plan?
A news story was published stating the Saskatchewan government was considering the sale of Innovation Place’s Saskatoon campus to the U of S and its Regina business park to the U of R.
Minister of Central Services Ken Cheveldayoff recently stated that he’s evaluating around 660 buildings across the province to see if they are still in proper use and if there is the possibility for them to be sold.
What are the questions that are not being asked?
Well, it depends on who you ask.
I didn’t live in Saskatoon when the facility was built in 1988 but from what I’ve read the location was as controversial a point then as it is now.
Saskatoon’s City Council recently commissioned a report to investigate the feasibility of a downtown arena development, researched by the group that helped Edmonton develop their Ice District.
To figure out why the discussion has come up, it may be prudent to take a look back.
In the past few years, however, the “Saskaboom” economy attracted people so quickly to the city that neighbourhoods on both sides of the river filled up considerably faster than previous estimations.
After a two year period where we witnessed a steady increase of three percent, I am pleased to report that the research for 2017 illustrates a steady city wide average decline to 7.7 per cent.
I am a commercial real estate agent in Saskatoon. I’ve dealt with your companies on behalf of landlords and owners over the years.
Commercial hookups are different than residential services in that commercial clients will often require a number of people to be authorized to deal with the account.
This isn’t a new issue, I’m sure you’ve been dealing with it for years.
They wouldn’t feel pressured to take space that isn’t quite right or doesn’t entirely suit their needs.
But it happens far too often in my world. Why?
I used to smirk a little every time former mayor Don Atchison found a way to work in the “Saskatoon Shines” message into public speeches.
But I’m drinking the koolaid and on board these days with repeating something he was fond of reminding people: Saskatoon is where it’s at.
On Friday our Saskatoon ICR crew travelled to Regina to experience the shiny new Mosaic Stadium and support our Rider’s 37 -12 defeat of the Alouettes.
Although not the point of this story, I have to say it’s an impressive facility, one that this province can be proud of.
On our way to the game we stopped in to hook up with our Regina group and tour their new offices.
Sears has finally pulled the plug. They were granted permission Oct. 13 by the courts to start liquidation of their remaining stores.
This includes a job loss for over 12,000 people who have helped served generations of Canadian shoppers.
So I posed the following question to my friends and social media followers this week: If Sears is out of Saskatoon’s Midtown Plaza, what should be in?
After a flurry of brainstorming I got some pretty good suggestions. So hopefully Kingsett Capital, the Midtown Plaza landlord, is listening!
Our latest 3Q17 market report shows a very slight increase of 10 basis points to 8.1 per cent in Saskatoon’s overall industrial vacancy rate.
This very marginal change does not alter our belief that this market has stabilized. Both Marquis and North Industrial areas which are by far the largest warehouse districts in the city did decline in vacancy to 9 per cent and 5.6 per cent respectively.
I enjoy capturing a positive Saskatoon commercial real estate story when they surface. Our recently released 3Q17 retail survey provides me that opportunity. After two quarters of negative absorption, retail vacancy has decreased by 20 basis points to 4.1 per cent.
Due to continued population growth and expansion of new neighborhoods, we see a healthy amount of new retail development for the Saskatoon metropolitan area in coming years.
Bar code scanning changed everything, none more significantly than grocery stores.
If the inset picture is a confusing one to you, let’s take a trip down memory lane and a quick look into what the future holds for the grocery retail experience.
People often ask me if we have lulls or slower periods in commercial real estate sales and leasing.
My typical response is that we tend to be busy year round. But summer can sometimes slow down with clients taking holidays from the office.
So is this a reflection of the ICR signs you see around town? Probably not when it comes to our office market.
So why would do offers from buyers sometimes come in undisclosed?
We as professionals in the commercial real estate industry can be known to talk out of both sides of our mouth.
There is no question that almost every stage of real estate development has become more complex.
I often hear frustrated comments due to the increase in resources and knowledge required to navigate red tape from what can be numerous applicable authorities who have jurisdiction over development.
And yet, in some cases there are not enough controls in place.
No, in fact, both retailers share a strong entry into our market and have made an impact in our commercial real estate landscape.
The question is: will craft breweries melt out as fast as the frozen yogurt competition did?
With the pace of technological change now accelerating, it is not reasonably possible for businesses to plan farther than five years into the future.
We like to think we know, however, the change that is coming upon us is so rapid that no one has a clear picture of where we’ll be in ten years.
I see three evolving trends which will translate into opportunities for the savvy commercial real estate broker.
It looked like the end was near when HMV Canada announced they were closing all their stores but homegrown Sunrise Records has stepped up to fill the musical consumer gap.
I had the pleasure of moderating the office panel at the Saskatchewan Real Estate forum in April.
One of the topics that seemed to “gather legs” during our discussion was Regina’s current office development policy as it relates to Saskatoon’s proposed office development bylaw.
I discussed some of the issues surrounding this topic in an earlier post a year ago: Regina’s policy, implemented in July 2012 does not permit major office developments more than 43,000 square feet of floor space outside of the core area (except in limited and specific contexts; e.g. accessory to an institution).
There were four permits issued during the month of April however that number has remained unchanged since the end of April.
Spring is typically the season we see the greatest number of new industrial construction starts.
Leasing commercial retail space can vary by development but there are some fundamentals that most tenants in this sector should take into consideration while shopping around.
It’s not hard to find opposing opinions on the philosophy of disengaging from technology, nor is it possible for me to say what’s right for you. My wife and I have experimented for a month now with “technology free Sundays.”
Our definition of “technology free Sunday” is that our cell phones and computers are shut down from the time we retire Saturday night until Monday morning. The experiment has been positive for both of us.
They are recognizable by name alone. They are examples of commercial real estate known throughout the world whether you’ve physically seen them or not.
How significant is a name when it comes to commercial buildings?
Even the most seasoned tenant can miss some pretty vital points when investigating new space. It’s certainly more challenging for new businesses that have never occupied commercial real estate before.
Here’s a few tips to look out for that can save you money and hassle down the road when searching industrial spaces.
My grandmother and I recently discussed the future of Sears Canada. Outside of heavy news coverage of the US Sears hardships, she identified something that dropped from all our radars: the absence of a Spring/Summer 2017 catalogue.
Amid no apparent fanfare, Sears Canada appears to have quietly shut down their catalogue service.
So what’s going on?
Retail continues to play a stabilizing role in Regina and Saskatoon commercial real estate. The office vacancy has hovered in the double digits for the last 3 – 4 years while the industrial sector witnessed a 3% increase in vacancy in 2015 in both cities.
Here’s a synopsis of the presentation by one of ICR’s partners, Linely Schaefer made as Moderator on the retail panel last week at the Saskatchewan Real Estate Forum.
In spite of a forecast for a slight increase in the unemployment rate and decrease in housing starts in Saskatchewan, RBC Provincial 2017 Outlooks is predicting a growth in GDP of 1.8 per cent.
That’s after two consecutive years of negative growth, due mostly to weakness in our energy and non-energy mining sectors. To say that the Saskatoon office market has been simply affected by these provincial economic factors is an understatement.
In fact, as you can see by this historical vacancy graph, you have to go back to 2005 to find vacancy as high as we experienced last year. Is there a light?
It’s been a long hard road for the Saskatoon Industrial real estate market over the last few years. We’ve seen average vacancy skyrocket from under 4 per cent to over 10 per cent and significant softening of net rental rates.
The recent announcement of the ICR brokered Mitsubishi Hitachi Plant acquisition by Brandt Group injects some much need optimism into this sector.
With 208,000 square feet (SF) on over 22 acres, the wind turbine factory has the potential to employ 500 people.
The town of Kindersley has a total population of 5,628 people but trades as a hub for more than 40,000 surrounding residents. Their history in oil and gas goes back many decades and they are certainly not tapped out yet.
Some holes are surfacing in the climate change stance as stated in this recent article. You may or may not believe the world is entering an irreversible period of global warming.
There is no question that air pollution within our world’s mega cities and the waste being deposited into our oceans are a result of increasing population density and our enormous human footprint. Can a business case be built for constructing and refurbishing buildings with environmentally friendly specifications that goes beyond supporting the global warming cause?
Let’s explore that question.
I have been a fan of the shopping mall experience for as long as I can remember. Maybe it’s my upbringing as a country girl, but I’ve always found interior malls to be an exciting place to visit.
Despite what appears to be dire times for the mall, market research indicates that some traditional shopping centres are doing very well. And in fact, aren’t down for the count at all.
Every deal is unique but I’ll provide a few examples that most commonly occur in the Saskatoon commercial real estate market.
Most businesspeople make it common practice to hire a broker to list their space for sale and/or lease.
There are also many compelling reasons to seek formal representation when looking for a new home for your business although this may not be the best solution in all circumstances. Don’t sign a contract unless you believe you will benefit from representation and save money.
Let’s explore the advantages of contracting one commercial real estate company to partner with to meet your goals and ensure the most favorable outcome.
Saskatoon City Council has approved the sale of the former municipal police building on 4th Ave S and now the work will begin for us.
Originally built with a uniquely specific purpose, this property is going to get a new lease on life.
In commercial real estate leasing the landlord can fully recover the hard costs associated with operating the building from the tenants. These expenses are most commonly referred to as occupancy or operating costs.
Most leases will allow for tenants to ask for a breakdown of costs on a per annum basis. But is there a benefit in asking for the breakdown during lease negotiation?
Let’s also assume you provided that purchaser a very comfortable six week conditional period to complete their due diligence and arrange financing so they don’t have to come back to you with a request for an extension.
I just experienced this exact situation as a listing broker working with a buyer’s agent from another brokerage.
There has been much written about the benefits of the “new” open office concept. On the other hand it’s not difficult to find articles which state the open office concept has been proven to not be effective.
The truth is it depends upon the dynamics of a company and personal preferences of the individual. It is important to tell you that I have my own bias on this issue. I will nonetheless do my best to present the pros and cons objectively.
The International Council of Shopping Centers (ICSC) held their annual Canadian Convention in Toronto from September 19-21. The event allows brokers, owners, developers, and retailers to meet up and form relationships at one central location.
With over 150 booths of various disciplines, attendees were able to mingle and cook deals in person. ICR sent a large contingency of brokers as usual and they came back with encouraging news.
Leases are created by landlords to protect their investments. They identify the rights and responsibilities for both parties during the term of the relationship.
Because in most cases the lease comes from the Landlord, he or she is going to be more aware of the clauses and ultimate implications. No one is trying to pull the wool over a tenant’s eyes, but there are items that are important to understand prior to entering into an agreement.
We have seen annual property tax increases average 5.43 per cent over the current council’s four-year term. During this same period the consumer price index indicates inflation has risen by an annual average of 1.9 per cent.
Anyone seeking civic office who is riding on the representation that they’ll keep increases under the rate of inflation without revealing a road map simply lacks credibility.
There is lots to talk about surrounding this issue.
How brave are you? Are you willing to take risks?
Buying an old building to restore or spiff up can be a bold move but the reward can be so satisfying.
Research this topic and you’ll find many opinions and trending theories and on the most efficient and pleasing office environments. Contrary to what some of these theories may try and tell us, I don’t subscribe to the belief that one solution fits all.
There are some useful tips available that is worthwhile considering to help make informed business decisions.
Accountability is defined as the fact or condition of being accountable; therefore, responsible. I think it’s a word that is thrown around without much consideration for the consequence of the potential expectation created.
A few weeks ago, I was searching for a photo to accompany an earlier blog post. It didn’t surprise me, but it was a little disheartening to find that images of female real estate agents were hard to come by.
In an earlier, January 2015 blog post I discussed the Employee Purchase of ICR. Nineteen months have passed since that announcement; let’s try and take an objective look at the pros and cons of this method of selling a business.
I believe in both our personal and work lives, where change is involved, it is beneficial to stop and take note of what worked, and what kind of challenges we encountered along the way.
We field a number of questions regarding the type of sale or lease product that moves the quickest in our market. It’s hard to generalize because every commercial real estate property is different however there are certainly those that stand out from the rest.
We are always searching for new product to bring to our clients, so pay attention to our wish list:
With an abundance of industrial and office inventory, the story in Saskatoon’s commercial real estate market has not necessarily improved since the beginning of 2016 but it could be stated that things may be stabilizing.
I had a conversation with a small contractor this week whose view of the commercial real estate market was a little off to me. He indicated that landlords should be bowing to tenants and taking whatever offers they can, given our current vacancy.
I won’t disagree that we have a fair amount of inventory within our Saskatoon industrial and office markets. While deals and incentives are being offered I don’t think it’s a dire situation.
Saskatoon is the envy of many other cities. As a result of our city administration’s proper long term planning and successful execution of those plans, we have a vibrant and healthy core area.
There are many times I’ve had to circle the block during the week, in the middle of the evening, in the dead of winter looking for a parking spot. It’s somewhat understandable that there is a desire to entrench that success. In an earlier post, Saskatoon approves Growth Plan to Half a Million, we explored the city’s goal for the next 30 years.
Here we’ll explore the administration’s proposed office bylaw that would restrict suburban office development to under 21,000 square feet.
Location and demand stand out as the major leasing drivers of commercial real estate however they are not the only factors.
Here’s a few tips I share with landlords to help their properties shine above the competition.
There is no definitive start to when a generation begins, but millennials are loosely described as the next demographic following Generation X. They are defined as people born from the early 1980s up to around the year 2000.
Their needs and wants should be important to employers, because as a generality this group of workers will not necessarily just follow the money; they want a workplace that offers a lot more.
Not only the office set up but location and amenities will play huge roles in companies’ ability to attract millennial employees. We see examples of this already impacting our commercial real estate market.
Many people I speak with are surprised to learn that we have such a high demand for investment product in this province. I am quite often asked the question (possibly due to the high vacancy rate in the industrial and office sectors) whether we believe prices have “bottomed out.”
I will first need to qualify my definition of “quality,” however in the last number of years there has been absolutely no downward movement in the price of these assets. As a matter of fact there has been some minor cap rate compression in the past year.
A common question asked in conversation is: “how’s the market?” It’s difficult to provide a one sentence response to that question!
We’ve already reported the rather dull current status of the Saskatoon office and industrial leasing markets. We do have a strong demand for good quality Saskatchewan commercial real estate investment property however our supply is limited.
Where the story gets better, where we have a good balance between supply and demand and where we are still seeing new construction on spec is… retail!
The Saskatoon office market is sitting with an abundance of inventory on the market at the end of the first quarter for 2016. While this isn’t good news for landlords, it creates a real opportunity for tenants to negotiate attractive terms on new leases.
There are three important due diligence items that should be on your to-do list when purchasing commercial real estate in any asset class. I have just resolved that when applicable, my Business Manager and I will do everything reasonably possible to ensure Buyers that we represent will be provided these documents prior to removal of their purchase agreement conditions. Let me explain why!
It’s important that both parties in the lease agreement understand the obligations and implications of executing a sublease.
Many commercial real estate leases will include an option to renew clause. Like all clauses in a lease, this one is bound by some pretty specific rules that have important consequences to both the landlord and tenant.
I’m not much of a gambler, but I’m game to make a few wagers on the immediate future of commercial real estate in Saskatoon. I still thinking putting money in our market is a safe bet but there are some important items to consider.
Like so many material things in the world, the value of commercial real estate can often be in the eye of the beholder. There are two sides to this story; the hard truth is, the value to an owner user can outweigh what the market may be prepared to pay.
There are a number of items we look at when valuing a piece of commercial real estate. Here are just a few to consider.
In a couple of my earlier blog posts: “Five key benefits of commercial real estate investing” and “Mainstream media’s obsession with the equities market” I discussed why commercial real estate is a viable investment vehicle. It is surprising to some that in spite of the current tepid economy, our demand exceeds available product and is causing compression of some cap rates. There are a few reasons for this…let me explain.
When developers and investors are considering commercial real estate purchases, their broker is often called upon to render an opinion on site feasibility. As Barry and I would both tell you, we are not engineers or architects but we do have a pretty good idea of what is most commonly requested in our market.
Sharing some of our market insight can be important to the development of a site when it comes to tenants’ current expectations and achieving an expedient lease process on the property.
Traditionally the general economic activity affecting Saskatchewan’s commercial real estate industry is impacted by three main outputs: agriculture, energy and potash. The Conference Board of Canada’s forecast of 2% GDP growth in 2016 is based on a resumption of typical agricultural production and somewhat lessening declines in the energy sector.
I’m not sure that I agree with the assumption that we will see recovery in the energy sector next year. Certainly however a lower loonie contributes to a stronger export market with the U.S., by far our largest customer. We believe 2016 will see some growth; two percent may be a bit optimistic.
The Royal Bank of Canada forecasts 3.2% retail growth for this province. An achievable number if we continue to grow our population.
With all the economic doom and gloom, it’s time someone looked at what’s going right in Saskatoon. National tenants continue to look at our market and there are brave developers out there with the belief that if they build it, they will come.
It is a simple fact the commercial real estate rental space will take longer on average to lease than a residential suite. After a commercial rental unit (cru) has been on the market for a period of time a discussion should take place between the Broker and Vendor exploring potential reasons.
There are many factors that can contribute to a lack of success in locating a suitable Tenant. Has the space been properly marketed, does it require updating, refreshing (You only get one chance to make a first impression) or demolition of obsolescent improvements, would rental incentives such as free rent or a Tenant improvement allowance be appropriate, etc. One of the questions that needs to be a part of that discussion: is a price adjustment required? There isn’t necessarily a simple answer to that question however we’ll explore how that discussion might look.
I came across an article entitled “Real estate value tied to human behavior” which takes an interesting view on the future values of commercial real estate properties, office in particular, when it comes to the psychology of the upcoming millennial workforce.
In commercial real estate the asset value is often attributed to lease rates. But it’s a unique concept to think employee wants and needs could be a contributing factor in achieving value to a space as well.
ICR Commercial Real Estate has released their third quarter musings regarding the office, industrial and retail markets in Saskatoon. Oversupply and slow absorption lowered expectations over the previous quarter, but where does that leave us?
With technological advancements facilitating consumer’s ability to shop, the emergence of e-commerce continues to gain momentum. Many experts once believed that the future of retail would lie primarily within the e-commerce marketplace as online retailers were expected to overtake traditional brick-and-mortar chains. As a younger generation of shoppers becomes the main consumer within our marketplace, will e-commerce continue to dominate?
There are many terms and clauses in commercial real estate leases. Sifting through all the legalese can be quite daunting. Various responsibilities and rights exist for the benefit of both tenant and landlord.
One term that rarely makes it into the lease, but may be asked at the offer stage, is the termination clause. Landlords typically shy away from it. Let me tell you why.
A client recently voiced disappointment that I had not introduced a particular party to his property. This party was made aware of the property by the previous occupant and approached the owner directly. We had represented to this owner that if I or one of my colleagues were working with someone whose needs aligned with the space we would present the property. I obviously had not properly communicated however what we would not do without an executed listing agreement in place.
Saskatoon core neighbourhood residents are up in arms regarding the recent announcement of a City Park grocery store closure. The media picked up the story quickly soliciting the shocked reactions of people living nearby the Loblaw-owned Shop Easy Foods on 7th Ave.
The impact to people who utilized and depended on the retailer is significant.
I just returned from our CORFAC International conference in Minneapolis, MN. One of the session topics was “The Art of Negotiating.” In an earlier blog post, The Psychology of the Negotiation, I focused on just four strategies. Since I find this part of my business so fascinating I wanted to share a few more techniques that can be very effective.
The University of Saskatchewan is the largest urban land owner in Saskatoon outside of the City of Saskatoon with almost 1,000 acres of land ready for development. And they are ready to start maximizing their investment.
The U of S set forth a plan in 2009 to start considering the re-use of their expansive land inventory to capitalize on its potential going forward. This plan was recently addressed in the news as it starts to take shape. The U of S has purchased land in Clavet to begin moving some of the agriculture programs out of the City limits.
So what happens next?
When I started in the real estate industry, a single exterior photo was the standard for use on listing information packages. As a matter of fact, back then the use of black and white pictures was not uncommon. Within a few years many brokers started using wide angle lens to produce multiple interior and exterior photos.
As the internet evolved, we saw change in almost every area of our commercial real estate industry. The ability to seamlessly post a high quality video link to websites, email blasts and promote them through social media has resulted in much higher market penetration for our listings. Drone technology has now thrust us into the next generation of high definition video.
Barry and I have both discussed the topic of tenant improvements within earlier blog posts. But what are the big ticket items that can make or break a deal? Let’s explore the things to look for when scouting out a place for your business.
For as much as I’ve learned about zoning across municipalities, there is always more to the picture than meets the eye. I’d like to share my latest discovery with you.
I will speak solely of the City of Saskatoon going forward though there are likely similarities to this process in other communities. The important thing to know is that zoning is specific to the municipality you’re researching and the town or city hall is your very best resource for allowable uses on commercial property.
There has been a continuation of the vacancy trend that began in the majority of office markets in Canada in 2014. That average national statistic which exceeded 10% at the time has continued to increase in 2015.
Over my seven years with ICR I’ve had a few deals that stick out in my mind. Much like a snowflake, every deal is unique but there are a few noteworthy examples of what I’d classify as the good, the bad and the downright ugly.
For reasons that can be very different, there are some significant benefits to high ceilings in commercial real estate buildings. For the purpose of this article I am going to focus specifically on office and industrial commercial real estate.
As discussed in previous market posts, Saskatoon is not immune to national trends in office and industrial commercial real estate. Nor is it when it comes to our retail sector.
Most commercial real estate agents would agree that our tenants and buyers are less likely to show warm, fuzzy feelings about properties like a homebuyer might. Often functionality and cost win out as the primary decisions behind choosing a commercial space.
But presentation does matter to these clients and there is typically only one opportunity to wow them so why not make it count.
Saskatoon has a reputation, literally within North America, of raising up creative leaders with a strong work ethic. We have a healthy arts community. There have been a number of recent examples of innovative new and infill residential developments however the number of innovative commercial examples are few. Why do you think we are lacking in this area?
We are often tasked with researching space for tenants using a monthly budget. But when we use a price per square foot as an industry to compare properties against each other there are a few steps required.
Thinking like a tenant, ICR’s Research Analyst Alvaro Campos put the question to our office this week: how much does $5,000 a month get you in Saskatoon’s office, retail and industrial?
There are a number of media sources reporting double digit vacancy rates in the Saskatoon office sector but it’s important to identify the qualifying factors that go into this data. Here is a brief analysis of how our Market Analyst Alvaro Campos is dissecting the information for ICR.
This is not a topic we tend to talk a lot about so I thought it was important to reveal to you here how we really think. We eat, breath and sleep commercial real estate. In order to be successful in this business I need to believe sincerely in the benefits and rewards of investing in commercial real estate. This is one area that we do not fully practice what we preach.
Office condos aren’t for everyone but they may just suit your business better than you think. There are a number of benefits to purchasing a condo:
Starting the search for commercial real estate can be overwhelming given the amount of information there is to digest. Here are a few tips to get started in the right direction if you’re leasing office space specifically.
Advances in technology have forced many industries to change their selling tactics and commercial real estate is no different. A throwback Thursday video tweet about the introduction of cell phones in Saskatoon made me pause and contemplate how far we’ve come. But where are we going?
It’s not possible to accurately predict where the commercial real estate market is going this year. In order to understand the factors that generate changes in the market, these causes must be first be identified and evaluated.
A general market gap analysis, evaluating the difference between demand and supply of space involves four major market categories: investment, office, industrial and retail. Even though a region’s economic prosperity tends to move in one direction, it is not uncommon to see these different sectors trending in opposite directions.
As agents we often get asked why certain national and international retailers have not set up shop in Saskatchewan’s commercial real estate market. We don’t have all the answers but there are some legitimate challenges for mega retailers considering our market.
Like most industries, there is specific commercial real estate lingo that we use every day that may not be immediately evident to clients. Here’s a few I use nearly every day that I’ve had clients look for clarification on.
We are often engaged to lease or sell property by clients who wish to keep the information confidential from the general public. There can be many reasons why discretion is required. The client gets to choose what level of confidentiality is necessary.
I think it’s fair to say that uncertainty in oil and other resources revenue streams do play a role in the work of decision makers in commercial real estate; their motivation to buy, sell and lease in the Saskatoon market. Given recent events, I’d like to explore the current mood in all sectors of our commercial real estate market.
This is a great day for ICR, its employees and agents. It’s also a great day for Saskatchewan and the owners and tenants in the real estate industry. We are pleased to announce a new partnership. ICR developed over its 22 year history a unique operating model for a Commercial Real estate company. The company operates in a world of multi-nationals and competes at the top level in the Real Estate Arena.
We said hello to many new restaurants and retailers in 2014 but we also had to say goodbye to a few in Saskatoon. A recent article about Toronto landmark real estate that has been closed or demolished, inspired me to think of the properties or businesses that gave way to growth and change taking place in our Saskatoon market in 2014.
There is one area that springs to mind that many people have underrated over the years. See if you can guess where I’m talking about.
Previous to that, between the years 1978 and 2006 I sold new and then resale residential real estate. My last four years during that period I was a non-competing Branch Manager.
When the company I had been working for was sold I made a decision to make a move into the world of commercial real estate.
I knew the business would be different but was not prepared for just how different it was. I brokered a few transactions but mostly floundered for about six months, believing I would find my way by approaching the business using my old residential tools.
It was about the seventh month when I finally came out of denial, realized I had to throw everything I knew out the window, and start asking a lot more questions. So why are the two sectors of the business so different? Here are three of many reasons:
Laws governing commercial real estate tenancies vary from province to province. In Saskatchewan, once a tenant has been determined to be in default (by definition of their lease agreement) there are several remedies available to the landlord.
Some of the information presented here is from an article prepared by the local firm of Robertson Stromberg. This should not be taken as legal advice, rather a discussion on some of the consequences that can be imposed on delinquent tenancies. Each tenancy must be dealt with on a case by case basis.
In an earlier blog post: “Have Saskatchewan commercial real estate values peaked?” I discussed the future of commercial real estate values in this province. Here we look more specifically at what I will refer to as the functionally obsolescent asset class.
For the past eight years, Saskatoon’s retail vacancy rate has stayed under three per cent leaving tenancies with little choice or few options to locate here. Recent construction surges have started to create more opportunities in the commercial real estate market for retailers looking to get their foothold into Saskatoon.
Saskatoon vacancy rates have held steadily throughout 2014, with only slight increases due to new construction and tenancies vacating outdated properties. We break our commercial real estate vacancies into three main areas: Industrial, Retail and Office. Here’s a snapshot on each as of October 2014.
We have clients requesting commercial real estate advice on a daily basis. It is also necessary to make personal investment decisions to achieve our own long term financial goals. Here are three examples that come to mind where I was found to be “off the mark!”
Let’s assume you are 75 per cent through your initial term of lease and the space you occupy is working well and business is good. What are some important considerations to keep in mind when approaching the lease renewal?
When researching a commercial real estate lease or purchase, determining the zoning permitted by the municipality should be an important factor in the decision making process. Implications for a tenant or buyer vary slightly but they can both have significant impact down the road.
We find dual agency still very common in Saskatchewan commercial real estate transactions. I am not going to address the pros and cons of dual agency in detail within this article. That is a topic unto itself.
Let me just say that due to the confidentiality requested by many of our sellers, I believe it will continue to be a practical business solution within our industry for many years to come. Complications arise when I, as a listing agent have an offer on my own listing and at the same time one of my colleagues and/or a cooperating broker has an offer.
You lift it up, look closely and if it starts to grow too much hair, drop it and walk away! A buyer typically has only a portion of the relevant information before making an offer. Discoveries often surface during due diligence which can quickly take the fun out of the deal.
It may seem common sense that a lease is binding when both parties have executed the agreed upon document. But what if the tenant or landlord change their mind at the last minute and handwrite in a change?
Restaurants open and close every day around the world, and it’s no different in our Saskatoon commercial real estate market. There is always speculation and rumour as to why a venue has been shuttered but it can often boil down to the hard truths associated with commercial real estate.
The parking allocation provided for in a development requires proper planning. A very useable site can be rendered dysfunctional if not properly considered. It is also important to understand what the applicable zoning bylaw states for the intended use.
There has never been a better time to dispose of your Saskatchewan commercial real estate asset that was designed in a past decade. There are many reasons why a building could be referred to in this manner. As an example, if I am talking about retail or office, functional obsolescence could refer to lack of parking; industrial might be due to low ceiling height.
There is no right or wrong answer when it comes to the purchase vs. lease debate for commercial real estate property seekers. The decision lies in your philosophy or mandate when it comes to capital expenditures, business equity, and often, the bottom line in your bank account.
I have heard Landlords state: “I can renew this Tenant at the same rental rate that you’re able to negotiate.” Alternatively, Tenants often believe they can do a good job representing themselves in their renewal. Whether you are a Landlord or a Tenant, I can make a very solid case why you should contract an experienced commercial real estate broker to represent you. I am not promoting dual agency but rather single agency; a broker representing either tenant or landlord.
It can be difficult for tenants to estimate what size of space of they need. You are going to pay per square foot for what you lease, so you want to make sure you’re utilizing every inch of every corner.
Often times I will get the call for a specific size range only to take a client on location and find out is much larger or smaller than they actually need. It’s not a great use of their time or mine so I like to use a couple tools to help estimate what that need might be ahead of time, we are much more likely to hit close to their target.
You’ve found the space and have come to terms with the Landlord. You’re nearly at the finishing gate to getting your business venture off the ground, and BAM! The landlord has presented you with a 30-40 page lease that you must review to finalize the deal. Should you read it or just sign off and get the moving party started?
We find Tenants have difficulty understanding why a sophisticated Landlord will not “drop their pants” negotiating lease rates with new and existing tenants, even when a property may appear to be in distress. Let me explain why this counter intuitive statement is, in most cases, true.
As much as new tenants can use an education on the world of leasing, so too can existing tenants. For newbies, certainly there is a learning curve with the terminology and nuances of negotiation. But even for tenants in the Saskatoon real estate market that may have been leasing for years, there is some benefit in going back to Leasing 101 class.
In order for us to treat your interest as serious, you will need to know: the size (square footage) you require, the budget you have to spend and the term you’d be able to enter into. We can give you an idea very quickly if these expectations are realistic. Agents should ask questions regarding your business plan. We want to make sure that you will be a good fit for the long haul.
Would a Tenant actually enter into a deal with this specific goal? I have seen it happen. The Agents and Landlord involved were blind to the Tenant’s motive until long after possession was granted. Information later surfaced that revealed the whole process was a very intentionally played game.
All lease and sale negotiations can be characterized as a dance of sorts. An offer is written, a counter is submitted. Both parties angle to achieve the best results for themselves. There is give, there is take. It’s not over till the music stops, proverbially speaking.
One of the more underestimated dances, however, is the renewal interaction. From our experience, both Landlords and Tenants can benefit from some advice in this category.
For many first time buyers and tenants the Offer process can seem a bit confusing. At what point am I committed past the point of no return? What are my obligations to this agreement? When is my money due and can I still get it back? Let me break down the process for you.