In normal times, negative absorption wouldn’t be seen as a positive development in any industrial market, but these are not normal times.
With the Saskatchewan economy still finding its legs, coupled with a slowdown in development, the vacancy rate in Saskatoon’s industrial market inched up by 10 basis points to 8.1 per cent at the end of September, the highest in the country.
That’s down from more than 9 per cent a year ago but it’s up from less than 3 per cent in 2007.
Alvaro Campos, brokerage business manager with ICR Commercial Real Estate, said Saskatoon is still feeling the effects of a large amount of speculative building from 2012 to 2014, but he’s optimistic things will improve because the number of industrial building permits is down significantly from a couple of years ago. Much of the speculative building took place at the new Marquis Industrial park, and Campos said that’s where further development will happen once absorption picks up.
“We’re starting to show some stability,” he said. “It’s likely some of these trends are going to hold steady.”
Saskatoon has 1.9 million square feet of industrial space and there has been negative absorption of nearly 30,000 square feet this year. Industrial average asking rates are $10.65 per square foot, but some landlords are flexible.