The office vacancy rate in Saskatoon is projected to double - or more - in the next couple of years but the managing director of CBRE Saskatchewan isn’t worried.
With the first tower at the River Landing development scheduled to open later this year, bringing 155,000 square feet of space to the market, it was widely expected that vacancy would spike. Downtown, the renovation of the former Saskatoon police station into 64,000 square feet of Class A office and retail space is also nearing completion.
Michael Bratvold believes Saskatoon’s Class A space will feel the biggest pinch from the first new office construction in the city’s downtown since the 1980s. The vacancy rate in office space the central business district is currently sitting at 14 per cent.
“We’re going to be in the 20s or 30s in a year or two,” he said.
As bad as that may sound, it’s actually a good problem to have. Bratvold said in a small market like Saskatoon, a handful of projects can cause big swings in either direction with vacancy.
River Landing’s second tower is expected to open in early 2021. Both towers have had a successful pre-leasing period, with more than 60 per cent of the 450,000 total square feet gobbled up by a wide variety of tenants, including some big names such as TD, EY (formerly Ernst & Young) and Nutrien.
The buildings that have traditionally been Class A space will now be considered B+ buildings, he added.
“Now is the time to do a deal. Landlords are looking to bring in new tenants to fill the void,” Bratvold said.
“Landlords in this type of product are going to have to be fairly creative, aggressive and competitive in order to retain tenants and to bring some new users downtown or from some of the older space. Having this new product come on stream really does shake things up a bit.”
While there have been a few downtown office lease deals done in the last couple of years, they’ve mainly involved existing companies moving from one building to another.