For the past eight years, Saskatoon’s retail vacancy rate has stayed under three per cent leaving tenancies with little choice or few options to locate here. Recent construction surges have started to create more opportunities in the commercial real estate market for retailers looking to get their foothold into Saskatoon.
Supply and demand
With over 138,000 square feet added to the retail inventory, absorption for Saskatoon’s retail sector doubled in 2014 over the year previous. For a market that had been underserved, this increase created a better balance of supply and demand.
Prime, front and centre spaces are still in short demand, however. Competition remains high for premiere locations within retail sites under development.
Lease rates in high profile locations are in the asking range of $36 psf net. In new developments where the majority of inventory is located inline we see net rental rates in the range of $25 to $29 psf.
East and West
The majority of east side projects are now focused on Stonebridge where the new Sobeys and Shoppers are locating. Future eastside retail will include the development of Holmwood, which could boast upwards of 895,000 square feet.
West side inventory is increasing on the existing Blairmore Smart Centres site with an additional 130,000 square feet to house Boston Pizza, Tommy Guns, Fatburger and Lowe’s.
North of Blairmore is the new neighbourhood of Kensington. There is approximately 94,000 square feet planned in the Kensington retail centre with major national retailers already locking down their positions.
We see expansion of national restaurant brands hitting the Saskatoon commercial real estate market in a big way. Downtown is now host to Fionn Macools and the Cactus Club of which both have set up first time locations in Saskatchewan.
Other new retail franchises include Canadian Brewhouse (Stonebridge), Mr. Mike’s Steakhouse (8th Street) and Victoria Secret (Midtown Plaza).
Looking into my crystal ball
As ICR has previously reported, we believe that our market could sustain absorption of 200,000 to 250,000 square feet annually. There is currently no retail inventory for purchase at the City Land Branch and there are no immediate plans to release any. If projects like Holmwood get underway soon, they could very well supply the Saskatoon market with enough product for a number of years based on our predicted absorption trends.
There are still a number of large retailers who have yet to set up in Saskatoon or Regina. Do you have any stores you’re holding out to see move in?
Posted by Kelly Macsymic