ICR Commercial’s first-quarter 2020 market report for Saskatoon showed all three sectors have increased slightly in vacancy with retail rising to 5.18 per cent, office to 12.84 per cent and industrial to 5.74 per cent.
“By the end of the second or third quarters of this year, I forecast the industrial vacancy rate to drop below the retail vacancy rate,” said Barry Stuart, managing partner and senior sales associate with ICR Commercial. “This would be the first time since we’ve been tracking Saskatoon market data that the industrial sector has emerged as the strongest asset class.”
Saskatoon has 24.8 million square feet of industrial space, so a vacancy rate of 5.7 per cent indicates steady demand.
According to data released by the City of Saskatoon, building permits totalling 264,097 square feet were issued in 2019, 60 per cent of which was in the Matrix Industrial Area.
“Despite this uptick in new supply, it is expected that speculative industrial development will remain restrained as a cautious mindset endures,” Colliers International noted in its recent look at Saskatoon’s commercial real estate performance.
In QI there were 90 acres of serviced industrial land for sale within Saskatoon, with the average asking price at $565,260 per acre. An additional 236 acres are currently on the market throughout the rural municipalities of Corman Park, Warman, Martensville, and Dundurn, Colliers noted.
Average prices for parcels outside the city start as low as $150,000 an acre in Dundurn, to as high as $390,800 an acre for land within the latest phase of Biz Hub Industrial Park, where construction of the new 133,000 square feet Varsteel Inc. facility was recently completed.
Positive absorption was seen in both the North Industrial and CN Industrial areas. Saskatoon industrial average rents continued to average $10.25 square foot, but this rate may not hold.
“Landlords continue to be aggressive with inducements in order to attract interest from tenants,” Colliers noted.
Asking rates start as low as $6.50 per square foot for existing inventory in less prominent areas of Saskatoon, with rates escalating to $13.50 per square foot for new inventory that includes an office component, according to Colliers’s first quarter industrial report.
Both Colliers and ICR cautioned that the lingering effect of the global pandemic may continue to keep Saskatoon’s industrial market off balance for most of this year.