Saskatoon’s commercial real estate markets demonstrate resiliency

We’ve just released our 2Q21 market surveys and all three sectors are reporting a reduction in vacancy.

Remarkable statistics considering the economic storm we’ve been passing through!

It appears that our resource rich economy is only going to continue to improve with the recent upcycle in commodity markets.

International demand for food, fertilizer and fuel have turned the corner after a slow 2020.

Let’s take a look at each sector individually.

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Permanent pandemic practices for the good

Saskatchewan has entered step three of our reopening plan and most restrictions from public health orders have been lifted.

But does that mean we should all go back to business as usual?

I think there are a few pandemic measures we could all just continue with.

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Buyer beware of often onerous commercial mortgage process

As a Commercial Real Estate Broker, it’s my job to prepare my clients.

Typically, there is a process they will need to go through to complete a lease or purchase.

The purpose of my focus here is to provide an overview of the steps necessary to mortgage commercial real estate.

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Vacancy does not equate to desperation

It’s easy to get skeptical about leasing commercial real estate with all the media reporting business doom and gloom during the pandemic.

Well I’m here to tell you, not only is their rising hope on the horizon but things aren’t near as dicey as some think.

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Surprisingly little correlation between interest rates and cap cates

Any discussion on cap rates needs to be prefaced with a cautionary note. 

That is, there are many factors that determine capitalization rates on a commercial real estate investment. 

Those factors include but aren’t limited to age and condition of improvements, covenant of tenants, term of leases, location, asset class and the tenant mix.

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Moe’s plan to re-open SK for business

Saskatchewan’s premier Scott Moe is optimistically eying reopening our province (again) to business despite some of our neighbouring provinces tightening down.

As much as I strongly believe safety is a high priority, I also believe salvaging our economy is just as important.

So what does Moe’s re-open plan mean for business?

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All will be revealed in Regina land sale

Regina City Council was publicly criticized last week for a land sale they engaged in with an undisclosed buyer.

Some of the outcry is from adjacent property owners who may or may not have had use for the land themselves.

But any criticism from the general public about the cloak and dagger secrecy of the sale may not be fair.

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Saskatoon sees lowest quarterly drop for industrial vacancy in over a decade

While we saw quarter over quarter decreases throughout 2020, the drop in Saskatoon’s industrial vacancy for the last three months has exceeded my prediction for the entire current year.

The industrial sector has seen a net absorption of almost 150,000 square feet (SF).

In January, I forecasted we would be at 4.8 per cent by year end.

Our recently released Industrial Market Report recorded that rate had already dropped to 4.71 per cent. That represents over a 60-basis points reduction within one quarter.

My review of the market stats would indicate that is the largest quarterly drop we have seen in over 10 years.

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3 tenant tips for renewals

Renewals in commercial leasing can be almost as important as securing a lease in the first place.

There is quite a bit of finesse to this process.

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My predictions were wrong (but cut me a little slack!)

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.

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