The overall Saskatoon vacancy rate has been trending lower since its peak in 2016. Our Q319 Industrial Market survey reports an overall current vacancy rate of 6.04 per cent.
That one number does not, however, reveal the complete story.
I consider a rate under 5 per cent to reflect a relatively balanced market.
How close are the eight submarkets to regaining balance?
Here’s an overview along with the factors that are important to consider surrounding that question.
Considerable variance in submarket vacancy rates
We’re reporting just under 1.5 million square feet of total vacancy.
It’s interesting that the average 6.04 per cent vacancy rate varies from a high of 15.25 per cent in the CN area to a low of 3.46 per cent in Sutherland.
The good news, I’m happy to report, is the two by far largest submarkets of North and Marquis areas are reporting 4.71 per cent and 3.74 per cent respectively.
It’s no coincidence that Marquis Industrial, which offers the newest inventory, is in greatest demand.
Saskatoon average asking net rental rate
Despite the improving trend in vacancy rates, the average asking net rental rate has only increased marginally by $0.05 per square foot net compared to $10.26 in Q1 2019.
Again, it’s not surprising to see Marquis Industrial showing among the highest average asking rate of $12.25 per square foot (as well as the highest occupancy costs) for reasons mentioned above.
Shift in specific occupant requirements
We are experiencing an increase in demand for design-build warehouses.
The features within existing properties are often not ticking all the boxes on prospective tenants wish lists.
This is due to the implementation of new technologies and greater demand for specific building elements such as higher ceilings. That explains why many new projects are initiated by owner occupants.
We are hearing mixed reports regarding our city and provincial economy.
I find it encouraging to see Saskatoon’s industrial real estate market, which represents close to 50 per cent of our total commercial real estate, performing so well.
Feel free to contact me if you’d like to receive a full copy of our most recent office, industrial or retail market reports.
Posted by Barry Stuart