After a 36-month downturn in Saskatoon’s industrial market, 2018 is shaping up as a year of recovery – but don’t expect much speculative building.
Only 143,000 square feet of new industrial space leased or sold last year, nearly all of which is owner-occupied.
“That allowed our absorption numbers to catch up with all of the inventory that had entered the market from 2014 to 2016,” said Duncan Mayer, research manager for Colliers Saskatchewan.
Industrial lease rates have fallen from $9.50 per square foot in the first quarter of last year to $8.50 at the end of the third quarter. Four years ago, lease rates were about $11 per square foot.
Mayer doesn’t foresee a significant amount of speculative space being built over the next 12 months, so he expects the vacancy rate will decline from its current rate of 7.5 per cent to between 5 per cent and 6 per cent. A year ago, it hit a 10-year high of 8.8 per cent.
There is still about 1.6 million square feet of vacant industrial space currently available in Saskatoon.
Even though there were 63 industrial buildings for sale during last year, only 10 have changed hands, including one that was sold twice.