I promised you that I’d hold myself accountable in my Jan 2020 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 5.65 per cent per cent in 2019 to 4.8 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?
I ask you to keep in mind, when I made my prediction, most of us were not aware of the profound impact COVID-19 was about to make across the globe.
So you have to go easy on me!
In spite of RBC’s recent estimate that Saskatchewan’s real GDP contracted by 4.7 per cent per cent in 2020, Saskatoon’s industrial vacancy rate still declined by 0.33 per cent to end up at 5.32 per cent.
RBC’s forecast for the next couple of years look more favorable:
Saskatoon Industrial Market has emerged as strongest sector
Our 4Q20 industrial report states, “Investor interest in the industrial market continued to be driven by relatively strong sectoral and property market fundamentals, both of which are expected to extend into the beginning of 2021.”
There is still seems to be a lack of speculative building. Only two industrial building permits were issued in 2020 totalling 20,000 SF.
This is only going to place greater pressure on the existing vacancy rate.
What’s my take on 2021?
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 finally break that 5 per cent barrier in 2021 which would be the first time since 2010.
The one factor that could negatively impact that prediction is a significant increase in spec building this spring and slowing 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