As reported in our first quarter Saskatoon office survey, we
currently have over 400,000 SF or 16.7 per cent vacancy in our Saskatoon
downtown competitive office market.
Those numbers do include the vacancy within River
Landing’s 185,000 SF East Tower which is nearing completion.
The numbers do not however reflect 40 per cent of the
space yet to be leased within the 300,000 SF Nutrien Tower which has just
recently started construction.
Once that additional vacancy is accounted for, we will be
reporting core area vacancy in excess of 20 per cent.
Saskatoon’s office market is in transition.
The demand for new Class “A” inventory is coming from users
There are not enough new tenants entering the market and the
“flight to quality” is projected to continue.
Let’s talk solution.
It’s easy to see the bad news stories about brick and mortar
stores shuttering from the overwhelming move of consumers to e-commerce.
But I don’t think retail will ever die completely.
Rather, there is a disruption to the way we’ve known it to
be and commercial real estate landlords will have to navigate their way through
this new landscape.
While both the industrial and office sectors have displayed somewhat volatile vacancy rates over the past five years, the retail sector has consistently performed well.
Aside from Regina straying slightly over 4 per cent in 2017, both cities have otherwise achieved a number below 4 per cent since 2013.
Let’s take a closer look at each city.
Our Lady of Paris, the literal translation for Notre-Dame de
Paris, has received an outpouring of public sympathy following a devastating
fire last week.
Having seen Notre-Dame in person I can tell you it’s something
The full cost of the fire is still being tallied but I’m not
sure you can put a price on something that is nearly irreplaceable.
There are times when it is not wise to invest in commercial
many potential investors don’t take the plunge out of fear of the unknown and years later regret it.
Let’s look at some examples of when you’d be advised not to
Last week, Saskatchewan’s
Minister of Finance Donna Harpauer released her second budget, which projects a
$34.4-million surplus for 2019.
Thinking selfishly, I wondered:
how does this budget impact commercial real estate sale investment in our
I purchased my second single family home in 1979. It was located at the end of a quiet cul-de-sac in a good neighborhood.
The downside was it backed onto a retail strip mall. That wasn’t a concern for me however because everything within that retail corridor was one storey.
Within a year of owning the home, it was announced that a five-storey office building would be constructed overlooking my rear yard.
I immediately sold the property.
Even though the project was public knowledge, I believed it would be easier to sell before it could be seen that the windows in that towering structure would have a full view of my yard.
From that early, first hand experience I can relate to
homeowners that are suddenly faced with a project that significantly impacts
the value of their home.
The Regina Leader-Post published an article in 2008 with Stu
Rathwell, a franchise partner in the new Regina’s Chili’s Grill and & Bar.
Stu shared that his Saskatoon location would be open by that
His optimism about the Chili’s brand was hopeful; if things
took off as he was hoping, he predicted people could expect to see several more
open across the province.
Fast forward to 2019.
If you happened upon Saskatoon’s Preston Crossing the last
week of February, you may have caught sight of Stu’s dream deflating right before
Entrepreneurs Louis and Shaol Pozez could not anticipate 63 years ago that the demise of their discount shoe business would be taken down by a network of computers
This isn’t a story from the rejected piles of Terminator franchise spinoffs; this is a reality.
The Pozez’ conception that grew into Payless ShoeSource brick and mortar stores across the U.S. and Canada are officially shuttering.
Their disregard for advancing online sales, in addition to highly leveraged assets, proved fatal.
I thought twice about writing this post!
Does it risk raising the question with the city
administrators: are our Saskatoon and Regina commercial property taxes too low?
Or… does it showcase just one more of the many benefits of
setting up shop in one of our two major Saskatchewan cities?
In an earlier post I referenced the
Canadian Property Tax Rate Benchmark Report released by Altus Group, and
supporting partner REALPAC with a focus on the commercial to residential tax
ratio. Continue Reading
The rules are the rules,
whether we like them or not.
Nowhere is this truer
than as it applies to municipal zoning.
I find clients can
easily get discouraged in property searches when they discover where their business
is, and is not welcome, as determined by the local zoning bylaw.
If you’d have asked me a few years ago about the long-term fate of the independent commercial real estate broker, I would have honestly expressed some uncertainty (you may be thinking, “but Barry, you are an independent commercial real estate broker… that means you would have been questioning your own survival!).
Most of that
uncertainty arose from questioning the independent broker’s ability to keep
pace with potential investment required in metadata.
at the current differences between a national and an independent regional
commercial real estate broker.
I promised you that I’d hold myself accountable in
this Jan 2018 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 7.7 per cent to 6.2 per cent.
That was after a significant 2 per cent decline in the previous 12-month period.
There were substantial changes to the commercial real estate
landscape in Saskatoon as we close out 2018.
I think it’s is a story of renewal and growth, would you
I am often accused of twisted thinking when I voice this inner paradigm and am therefore going to use this space to convert you to this liberated view of our Saskatchewan winters.
Awakening early to an announcement on my radio alarm that
the temperature is forecast to stay below 30C for the next week is for me, the
equivalent of consuming my favorite comfort food.
As an aside comment, I seldom step away from posting business content. This however happens to be the fifth anniversary of the launch of our blog and therefore feel justified straying from the norm.
Looking back on those first posts, it seems like only a couple of years since they were written.
On the first day of Christmas my broker sent to me
A qualified tenant for occupancy Continue Reading
You’ve just received a letter with the renewal options your financial institution is offering on your commercial mortgage.
How can you assess the competitiveness of the offer before you? The letter arrives at a time when you’re extremely busy.
Is it worth your time to research and explore other options?
You may be in your last year of university and considering your career options or, have just come to the realization that your current professional path is not going to be your lifework.
The idea of a career in commercial real estate sales is appealing. What’s your next step?
Talk to a few different Brokers. There can be significant differences between commercial real estate companies.
It’s beneficial to gain the perspective of more than one Broker to determine if the career is right for you.
If you decide to move forward, you’ll have a good sense of which company you would prefer to work for and the process they go through to decide who and when they hire.
Here are some questions to raise during the interview process.
The City of Saskatoon has officially put out a tender to lease the Farmers’ Market building in Riversdale.
At current, the facility is leased to and operated by the Saskatoon Farmers’ Market Co-operative Ltd.
In their original agreement to lease the property, they outlined their plans to expand the market hours over time.
That vision has only grown to three advertised full market days. The City is ready to let someone else take a run at it.
There is lots of chatter on the street with the recently released preliminary budget from the City of Saskatoon which proposes a 4.5 per cent property tax hike in 2019.
That chatter is incomplete without stepping back and looking at a couple of key issues.
Those two issues are residential and commercial tax ratios and the ongoing cost of city infrastructure growth.
Say what you like about it but over 450,000 people fed their curiosity and took in Saskatoon’s new public art gallery this past year.
That’s more people than encompasses the proper City of Saskatoon population.
More astonishing is that the Remai Modern was only projecting around 190,000 visits during their inaugural year.
Our quarterly market reports have just been released and we’re pleased to report that the overall industrial vacancy rate is heading in the right direction!
The increase in absorption over the last quarter has resulted in just over a 50-basis point decrease in vacancy from 7.5 per cent to 6.9 per cent.
We have, however, seen the average asking net rental rate decrease from $10.61 PSF to $10.20 PSF.
Earlier this week, I forwarded a client some historical data on Saskatoon commercial real estate capitalization rates. He came back to me with the comment, “Would be interesting how it (cap rate information) trends with interest rates.”
Sophisticated investors absorb data to make informed investment decisions. I asked our Market Analyst to gather the information. Here’s my observations because of that research.
For the purpose of this conversation, let’s assume you are sitting on cash or liquid asset(s) and have decided to invest a portion of your available capital into commercial real estate.
What factors need to be considered to make a prudent investment decision?
I wrote about the
advantages of partnerships, but let’s say the idea of a partnership does not interest you.
Have you noticed any changes in the convenience store staples in Saskatoon?
There are a few subtle changes happening worth mentioning.
Receiving that first response from a Tenant we’ve not encountered before, after waiting for their review of a lease, it is always interesting.
We represent both Tenants and Landlords; this article has been written from the perspective that I am representing the Landlord.
At times the Tenant is prepared to execute the document “as is” and at times they will request hundreds or more of changes. We have seen request that number exceed 1,000 changes.
We know all commercial real estate leases are written with a bias towards the Landlord, but what are the main reasons that Tenants object to the document?
One of my biggest challenges is being unable to find the right fit for tenants. In a commercial landscape that remains under-serviced for retail it’s not exactly my fault.
We did see some new construction of retail in 2018, so it’s probably time to revaluate where the inventory levels sit versus vacancy, midway to the end of the third quarter of 2018.
Looking at the numbers by area, who do you ask: landlords or tenants?
Today’s communication tools include email, voicemail, social media, text and electronic messaging services, video and audio conference calls and more recently, telepresence robots.
All of these can be useful, however there are times when they just cannot replace a “belly to belly” meeting.
In commercial real estate there can often be a variety of uses for a building depending on the zoning it sits on.
When a tenant vacates a space it can be difficult to anticipate who might backfill them based on the uses the property is best suited for.
So how do landlords decide if they should and shouldn’t spend money on a vacancy in order to get it leased up?
As a commercial real estate agent my job is to line up tenants with landlords, and sellers with buyers.
Unlike a sale, where both sides part ways at the end of transaction, I think leasing is a lot about building a relationship.
However, much like in our personal lives, we all know some relationships are just not meant to be.
There is nothing worse than putting a transaction together that gets mired in a lengthy conditional period with no end in sight.
Whether it’s a court ordered sale or a deal that continually seems to get extended, time kills deals that take too long.
It certainly doesn’t seem like it’s been 3 ½ years since our current ownership group purchased the company. A great deal has happened. The growth and success we’ve experienced over that period of time is because of the great people we work with.
When we began this process we spent a lot of time thinking about:
Why we do what we do?
The purpose of this story is to answer that question.
It seems like unlikely odds, Saskatchewan Liquor and Gaming Authority announced that all businesses awarded a cannabis retail permit were selected at random.
A University of Regina statistics professor told the Leader-Post that he’s calculated the odds of one company winning permits in four locations is a one in 1,319,760 chance.
From time to time we will receive a floor call from an individual asking one question: how do we charge brokerage fees to lease space.
I explain that our typical fee would be calculated based on five percent of the total net rental amount over first five years of the lease term and, if applicable, three percent on the balance (plus taxes).
In many cases the conversation ends there.
During my ten years in the commercial real estate industry, I’ve seen it all and very little surprises me anymore.
Every now and then however I get a new doozy worth sharing!
I’ve compiled a list of new and interesting ways that tenants have chosen to compromise their relationship with their landlord.
I was 20 years old when I made my first serious attempt at selling myself.
I had come to the realization after a period of overseas travel that we were incredibly fortunate to live in Canada.
Photo: Courtesy Leader-Post
Over a year ago, it was announced the Regina’s downtown Cornwall Centre was getting an H&M store.
The store opened this past weekend to a lineup of folks hoping to cash in on door crasher coupons between $10 and $300.
So why did it take so long to finally open the doors?
We found ourselves in the middle of a difficult situation this week.
Unfortunately, we have encountered problems similar to this in the past.
My Business Manager received a call from an individual who is purchasing a multi-tenant commercial property. We are the Listing Broker and this Buyer is represented by an Agent from another brokerage firm.
The Buyer was very frustrated with their Agent and wanted to know how they could proceed without him.
So what’s this ongoing problem I’m referring to?
We have been receiving a wave of phone calls from potential tenants looking to cash in on the upcoming legalized marijuana trade.
They are fervently shopping for locations which I feel like may be premature.
Is the province really prepared for this? I’m not sure any part of Canada is.
A profitable business enterprise relies upon the successful sale of a product and/or service. How that transaction takes place is changing in many corporations. There are instances where it’s becoming increasingly easier to complete the necessary research, shop for the most favorable price and terms, and make the purchase on-line.
There will however always be a place in complex transactions for a professional salesperson.
The Saskatchewan provincial government expanded PST in the 2017 budget to include restaurant meals.
Has it made any impact on spending habits? Statistics so far indicate perhaps.
Our latest retail report has just been released which reveals that despite a small increase in available space in 2017, we now show three consecutive quarters of stable vacancy.
It was made public last week that the City of Saskatoon has purchased one of the last properties of the now mothballed Saskatchewan Transportation Company (STC) in Saskatoon.
The timing is especially interesting as the
City recently commissioned a report regarding the feasibility of a downtown arena.
Could this be part of a bigger plan?
The discussion regarding crown participation in the private sector surfaced again recently.
A news story was published stating the Saskatchewan government was considering the sale of Innovation Place’s Saskatoon campus to the U of S and its Regina business park to the U of R.
Minister of Central Services Ken Cheveldayoff recently stated that he’s evaluating around 660 buildings across the province to see if they are still in proper use and if there is the possibility for them to be sold.
What are the questions that are not being asked?
Well, it depends on who you ask.
I didn’t live in Saskatoon when the facility was built in 1988 but from what I’ve read the location was as controversial a point then as it is now.
Saskatoon’s City Council recently commissioned a report to investigate the feasibility of a downtown arena development, researched by the group that helped Edmonton develop their Ice District.
To figure out why the discussion has come up, it may be prudent to take a look back.
I ask this question because I believe women bring great value to our profession.
It’s difficult to locate the current ratio of female/male licensed real estate agents in Canada.
A quick look at Saskatoon, SK as an example; of the 60 individuals who work full time in commercial real estate sales as licensed agents, 13 per cent are female.
Compare that to the 2017 NAR (U.S. based National Association of Realtors) Member Profile (which is made up primarily of residential agents) that states sixty-three per cent of members are female, that’s two thirds of all agents.
The City of Saskatoon used to plan their neighbourhoods with life expectancies of 10 to 15 years .
In the past few years, however, the “Saskaboom” economy attracted people so quickly to the city that neighbourhoods on both sides of the river filled up considerably faster than previous estimations.
Let’s put the cards on the table! We tend to support societal arguments that align with our own special interests.
We want what we want, but are not prepared to see the other side of our position. We align ourselves with special interest groups that agree with our view of the world.
According to 2016 census data, 53.6 per cent of Canadians live in single family homes. Saskatchewan, at 72.7 per cent is second only to Newfoundland and Labrador at 73.3 per cent.
The census reported that only 2.4 per cent of Saskatchewan’s population live in an apartment with 5 or more storeys compared with the Canadian average of 9.9 per cent.
We have to go back to 2014 to find a drop in Saskatoon’s industrial real estate vacancy.
After a two year period where we witnessed a steady increase of three percent, I am pleased to report that the research for 2017 illustrates a steady city wide average decline to 7.7 per cent.
I am a commercial real estate agent in Saskatoon. I’ve dealt with your companies on behalf of landlords and owners over the years.
Commercial hookups are different than residential services in that commercial clients will often require a number of people to be authorized to deal with the account.
This isn’t a new issue, I’m sure you’ve been dealing with it for years.
As we begin 2018, it’s an opportune time to ponder our priorities for the coming year.
We know that a leader’s most important job is designing and implementing strategies so the organization flourishes in the long term.
There’s a quote from an unknown author I like to share, “Change has never happened this fast before, and it will never be this slow again”
So with change happening that rapidly, how does a leader prioritize those strategies?
The recent closure of the Moose Jaw daily Times-Herald marks the further demise of local print media in Saskatchewan.
The trend is not unique to our province; small newspapers have been on the decline for many years.
It’s just hitting closer to home lately.
In an ideal universe tenants could plan ahead and leave themselves enough time to complete a comprehensive commercial real estate search.
They wouldn’t feel pressured to take space that isn’t quite right or doesn’t entirely suit their needs.
But it happens far too often in my world. Why?
I used to smirk a little every time former mayor Don Atchison found a way to work in the “Saskatoon Shines” message into public speeches.
But I’m drinking the koolaid and on board these days with repeating something he was fond of reminding people: Saskatoon is where it’s at.
On Friday our Saskatoon ICR crew travelled to Regina to experience the shiny new Mosaic Stadium and support our Rider’s 37 -12 defeat of the Alouettes.
Although not the point of this story, I have to say it’s an impressive facility, one that this province can be proud of.
On our way to the game we stopped in to hook up with our Regina group and tour their new offices.
Sears has finally pulled the plug. They were granted permission Oct. 13 by the courts to start liquidation of their remaining stores.
This includes a job loss for over 12,000 people who have helped served generations of Canadian shoppers.
So I posed the following question to my friends and social media followers this week: If Sears is out of Saskatoon’s Midtown Plaza, what should be in?
After a flurry of brainstorming I got some pretty good suggestions. So hopefully Kingsett Capital, the Midtown Plaza landlord, is listening!
Our latest 3Q17 market report shows a very slight increase of 10 basis points to 8.1 per cent in Saskatoon’s overall industrial vacancy rate.
This very marginal change does not alter our belief that this market has stabilized. Both Marquis and North Industrial areas which are by far the largest warehouse districts in the city did decline in vacancy to 9 per cent and 5.6 per cent respectively.
I enjoy capturing a positive Saskatoon commercial real estate story when they surface. Our recently released 3Q17 retail survey provides me that opportunity. After two quarters of negative absorption, retail vacancy has decreased by 20 basis points to 4.1 per cent.
Due to continued population growth and expansion of new neighborhoods, we see a healthy amount of new retail development for the Saskatoon metropolitan area in coming years.
A client will only benefit from a company that offers a full suite of services when each department provides an exceptional level of service.
I value a place of business that can offer me that exceptional one-stop shopping experience. I believe we at ICR have that to offer.
I’m about to really date myself here but as a kid do you remember going to the grocery store and watching the cashier type each item into a till?
Bar code scanning changed everything, none more significantly than grocery stores.
If the inset picture is a confusing one to you, let’s take a trip down memory lane and a quick look into what the future holds for the grocery retail experience.
People often ask me if we have lulls or slower periods in commercial real estate sales and leasing.
My typical response is that we tend to be busy year round. But summer can sometimes slow down with clients taking holidays from the office.
So is this a reflection of the ICR signs you see around town? Probably not when it comes to our office market.
Most commercial real estate transactions are negotiated between parties with full disclosure as to who each party is.
So why would do offers from buyers sometimes come in undisclosed?
We as professionals in the commercial real estate industry can be known to talk out of both sides of our mouth.
There is no question that almost every stage of real estate development has become more complex.
I often hear frustrated comments due to the increase in resources and knowledge required to navigate red tape from what can be numerous applicable authorities who have jurisdiction over development.
And yet, in some cases there are not enough controls in place.
What do craft breweries and frozen yogurt have in common? They can’t be mixed together that’s for sure!
No, in fact, both retailers share a strong entry into our market and have made an impact in our commercial real estate landscape.
The question is: will craft breweries melt out as fast as the frozen yogurt competition did?
With the pace of technological change now accelerating, it is not reasonably possible for businesses to plan farther than five years into the future.
We like to think we know, however, the change that is coming upon us is so rapid that no one has a clear picture of where we’ll be in ten years.
I see three evolving trends which will translate into opportunities for the savvy commercial real estate broker.
The Buggles famously sang “video killed the radio star” but streaming hasn’t quite put the final nail in the bricks and mortar music business just yet.
It looked like the end was near when HMV Canada announced they were closing all their stores but homegrown Sunrise Records has stepped up to fill the musical consumer gap.
I had the pleasure of moderating the office panel at the Saskatchewan Real Estate forum in April.
One of the topics that seemed to “gather legs” during our discussion was Regina’s current office development policy as it relates to Saskatoon’s proposed office development bylaw.
I discussed some of the issues surrounding this topic in an
earlier post a year ago: Regina’s policy, implemented in July 2012 does not permit major office developments more than 43,000 square feet of floor space outside of the core area (except in limited and specific contexts; e.g. accessory to an institution).
Up to and including June 13 th, only five building permits have been issued since January 1 st, 2017 within the Marquis Industrial Area.
There were four permits issued during the month of April however that number has remained unchanged since the end of April.
Spring is typically the season we see the greatest number of new industrial construction starts.
Leasing commercial retail space can vary by development but there are some fundamentals that most tenants in this sector should take into consideration while shopping around.
It’s not hard to find opposing opinions on the philosophy of disengaging from technology, nor is it possible for me to say what’s right for you. My wife and I have experimented for a month now with “technology free Sundays.”
Our definition of “technology free Sunday” is that our cell phones and computers are shut down from the time we retire Saturday night until Monday morning. The experiment has been positive for both of us.
Chrysler Building. Empire State Building. Rockefeller Center. What do these iconic New York City buildings have in common?
They are recognizable by name alone. They are examples of commercial real estate known throughout the world whether you’ve physically seen them or not.
How significant is a name when it comes to commercial buildings?
Even the most seasoned tenant can miss some pretty vital points when investigating new space. It’s certainly more challenging for new businesses that have never occupied commercial real estate before.
Here’s a few tips to look out for that can save you money and hassle down the road when searching industrial spaces.
I had a client ask yesterday what I believe to be the long term risk associated with investing in retail commercial real estate. Let’s ponder that question as it relates to the four major asset classes.
In an earlier post,
“Time to Sell Functionally Obsolescent CRE the discussion focussed on what could be considered owner occupant type assets. For the purpose of this overview, we’ll assume that the real estate is current and relevant ?” .
Retail continues to play a stabilizing role in Regina and Saskatoon commercial real estate. The office vacancy has hovered in the double digits for the last 3 – 4 years while the industrial sector witnessed a 3% increase in vacancy in 2015 in both cities.
Here’s a synopsis of the presentation by one of ICR’s partners, Linely Schaefer made as Moderator on the retail panel last week at the Saskatchewan Real Estate Forum.