When we refer to “balanced commercial urban growth”, the discussion differs depending upon the applicable Commercial real estate sector and city. For the purpose of this article I am going to focus on the Saskatoon industrial market. As a brokerage, we track existing and new developments in each commercial area and thereafter advise clients when and what to build.
Feet on the street
I am continually communicating with prospective tenants who provide me with a wish list of specifications and features that they require. We do see trends emerge with common requests which can include specific ceiling heights, yard dimensions and clear span interior space.
We can pass on this knowledge to developers who can then construct industrial buildings that are most functional for current market demand.
Extent of new development
The greatest challenge is trying to assess what is currently on “the drawing board” and in “the pipeline” to be constructed “on spec”. Owner occupants who are building for their own use are not a factor here unless they are including extra space in the design with the intent of leasing it out.
Our entire commercial sales staff meets weekly to report what each sales associate is working on. Because of our market share this usually provides a reasonable overview of what will be built in the coming months. What we do not always know are those projects which other brokerage firms or private developers are working on.
Our current Saskatoon industrial market oversupply can happen in any sector. The cycle goes something like this: We first see strong demand and absorption as a result of a healthy economy. Existing inventory is depleted and no longer able to keep pace with demand.
Many developers see an opportunity and jump in to try and satisfy that demand. Too much is then built and an oversupply is created.
We are looking for ideas that provide solutions to these market cycles. I believe the answer exists in somehow collecting the development data without compromising the individual builder’s specific information. It will have to be a solution in which all participants can benefit.
Maybe you know another jurisdiction that has come up with an answer to this problem? I’d welcome your input!
Posted by Barry Stuart