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.

Where did we end up?

In spite of RBC’s recent estimate that Saskatchewan’s real GDP growth was an anemic 0.6 per cent in 2019, Saskatoon’s industrial vacancy rate decline exceeded my prediction by 0.35 per cent to end up at 5.65 per cent.

RBC’s forecast for the next couple of years look more favorable:

Source: RBC Economic Outlook

Vacancy increase observed in two areas

Due to the recent 120,000 SF expansion of the Matrix Industrial Park (after completion of Building F which was 160,000 SF), the Marquis Industrial is showing an increase over the last quarter from 4.19 per cent to 5.11 per cent.

The North Industrial Area is showing a slight increase of 0.2 per cent to 4.92 per cent.

What’s my take on 2020?

Regardless of whether we are discussing industrial, retail or office, I believe we are in a healthy commercial real estate market when vacancy rates are under 5 per cent. I believe our overall Saskatoon industrial vacancy rate will decline again over the next twelve months to 4.8 per cent.

There is one factor that could negatively impact that prediction; a significant increase in spec building and slow market demand to absorb that new inventory.

Nonetheless, I will report back to you in 12 months… you can hold me accountable!

Posted by Barry Stuart


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