Industrial will evolve as the preferred CRE asset class

The sudden, real impact of COVID-19 can be seen in supply chain disruptions, lower consumer confidence and reduced consumer spending.

Trying to measure the macro picture, the scope and duration of the economic stoppage is not easy.

For those corporations who are currently sitting on surplus capital, waiting for the bargains to surface, it is still to early to assess how property values will be affected.

It is however, becoming clear which sector will emerge as strongest asset class.

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What might CRE look like after Covid-19?

There is no question about the effects of the Covoid-19 pandemic on Canada’s economy.

This sudden misfortune has tested the strength of the commercial real estate industry in ways we’ve never encountered before.

So what does the future hold for tenants when this is all over?

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Is there mega concern for megatrends?

Megatrends are often described as powerful and transformational forces that can change economy, business and society over the course of centuries.

Obvious examples of this would be the use of electricity, the creation of the automobile and in the most recent past, the adoption of the Internet.

We follow quarterly and annual trends in our markets, but what are some of the megatrends being predicted for our economy as they may affect commercial real estate specifically?

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Shining sector re-emerges in YXE commercial real estate

After reaching a record high vacancy rate of 10.3 per cent in 2016, the multi-family sector has rebounded.

The latest CMHC report, which was just released, indicates as of Oct 2019 that rate dropped to 5.7 per cent. That’s a significant decrease in just three years, 4.6 per cent to be exact, despite a rising supply of new rental units.

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I was off the mark in Q4 2019 Industrial Vacancy Forecast

I promised you that I’d hold myself accountable in my Jan 2019 post and report back to you. 

So, how did I do? At that time, I predicted a decline in the overall Saskatoon Industrial vacancy rate from 6.8 per cent to 6 per cent.

That’s after a significant 2 per cent decline in 2018 and a 0.9 per cent decline to 6.8 per cent in 2019.

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What does 2020 have in store for the commercial real estate market?

I’ve never professed to be a psychic, but I think looking over the trends of the past year I can safely make a few bets on the commercial real estate market for Saskatoon in 2020.

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Saskatoon retail continues market expansion

Ongoing expansion in our Saskatoon commercial retail sector has resulted in the overall supply exceeding demand.

Our 3Q19 retail market update reports the average vacancy rate has edged up to 4.6 per cent.

Let’s look at where that expansion is taking place and the market locations where the most interesting vacancy story can be told.

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Saskatoon property owners face tax increase, commercial owners’ shoulder greatest burden

The City of Saskatoon has tabled their epic discussion on a two-year budget for 2020/2021.

While the preliminary budget released this summer projected a 3.97 per cent property tax increase overall, we can all breathe a sigh of relief because it will only be 3.7 per cent.

Wait, what the heck?! That’s still a lot!

This is not good news for anyone, especially commercial property owners who already carry a greater tax load than their residential counterparts.

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Balance returns to 50 per cent Saskatoon’s industrial sectors

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.

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Pet business is nothing to bark about

Canadians have never been more in love with household pets.

According to the latest statistics from the Canadian Animal Health Institute (CAHI), there are 8.2 million dogs and 8.3 million cats in Canadian households.

That’s a ten per cent increase over the past ten years, reports CAHI.

This equates to approximately 41 per cent of all homes having one dog, or 37 per cent having one cat.

It’s no surprise then that the pet business is booming.

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