Traditionally the general economic activity affecting Saskatchewan’s commercial real estate industry is impacted by three main outputs: agriculture, energy and potash. The Conference Board of Canada’s forecast of 2% GDP growth in 2016 is based on a resumption of typical agricultural production and somewhat lessening declines in the energy sector.
I’m not sure that I agree with the assumption that we will see recovery in the energy sector next year. Certainly however a lower loonie contributes to a stronger export market with the U.S., by far our largest customer. We believe 2016 will see some growth; two percent may be a bit optimistic.
The Royal Bank of Canada forecasts 3.2% retail growth for this province. An achievable number if we continue to grow our population.
Twelve Secondary Markets
We have chosen twelve cities to track. In order of descending population count varying from 45,000 to 5,500 they are: Prince Albert, Moose Jaw, Lloydminster, Yorkton, North Battleford, Swift Current, Estevan, Weyburn, Martensville, Warman, Humboldt and Kindersley. Every city is reporting continued growth over the next ten years. Annual projected growth for this period varies from 0.17% to 11.4%. To classify growth of 9.45% (Martensville) and 11.4% (Warman) every year for a decade as a boom is an understatement!
Captured interest from the Nationals
ICR’s Business Manager and Market Analyst, Alvaro Campos reports, “More and more of Saskatchewan’s secondary markets are starting to capture the interest of retailers. As these markets continue to experience positive population growth, retailers will continue to be attracted to these areas.”
“The emergence of online shopping has changed the outlook of many retailers in terms of expansion. However, consumers can’t go online to purchase a sandwich or a burger, and this differentiator will continue to fuel the expansion of food users throughout the province,” explains Campos.
Retail Vacancy Statistics
Here’s a snapshot of our review of the retail vacancy rate in each market which as you can see varies from a high of 8.70 per cent to a low of 3.51 per cent:
Prince Albert: 5.38 per cent
Moose Jaw: 5.10 per cent
Lloydminster: 3.51 per cent
Yorkton: 6.82 per cent
North Battleford: 5.38 per cent
Swift Current: 4.46 per cent
Estevan: 5.56 per cent
Weyburn: 5.55 per cent
Martensville: 5.83 per cent
Warman: 7.44 per cent
Humboldt: 6.75 per cent
Kindersley: 8.70 per cent
We’ll take a look again at the end of 2016 and see how accurate RBC’s forecast for retail growth is. For a more detailed read of our recent report: Secondary Market Outlook.
Posted by Barry Stuart