While both the industrial and office sectors have displayed somewhat volatile vacancy rates over the past five years, the retail sector has consistently performed well.
Aside from Regina straying slightly over 4 per cent in 2017, both cities have otherwise achieved a number below 4 per cent since 2013.
Let’s take a closer look at each city.
Regina’s retail snapshot
This sector of Regina’s commercial real estate market is forecast to expand by up to 16 per cent or 1.69M SF within emerging neighborhoods.
Our 1Q19 reported 3.9 per cent vacancy. Rental rates reflect strong demand with asking rates for new developments ranging from $30/SF up to $42/SF.
Existing inventory is priced from $12/SF to $28/SF.
Saskatoon’s Retail Snapshot
3.3 per cent…that’s correct; our 1Q19 market report states that after reaching a high of just under 4 per cent in 2017 we have seen a steady decline in retail vacancy to it’s current 3.3 per cent.
But, look at this….in 2011 the average retail vacancy rate was under 1.5 per cent.
We divide Saskatoon’s retail sector into 12 zones. That 3.3 per cent average obviously means some zones are higher and some are lower.
Three areas that are currently reporting a less balanced market are 51st Street at 7.2 per cent, 8th Street at 7.5 per cent and 33rd Street at 24.4 per cent.
Interesting to note that Confederation Park is reporting the lowest vacancy at just 0.8 per cent
What Does This Translate To?
A potential investment opportunity that offers long term stability.
I believe you’ll agree that we’ve weathered some challenging economic times in this province over the past decade.
As you can see, despite those challenges, the retail commercial real estate market has performed well.
The location, any presence of functional obsolescence or deferred maintenance will affect the long-term success of any commercial real estate acquisition.
Forecast for The Future
We live in a province with rich and diverse resources. The world demand for food, fuel and fertilizer is not waning.
There is a rural to urban global transition taking place.
Those factors translate into long term, continued growth in emerging neighborhoods and densification of existing neighborhoods for both Saskatoon and Regina.
Despite the technology disruption currently taking place in retail, I’m placing my bets on it!
Posted by Barry Stuart
