Strong population growth in Saskatoon is providing much-needed fuel to the city’s retail sector, even as the unemployment rate inches up.
The city’s population grew by 2.8 per cent, or about 9,000 people, in 2017, blunting the impact on retail of the closures of Sears and Wholesale Sports.
According to a new retail report from Colliers International, the retail vacancy rate increased from 4.3 per cent in 2016 to 4.5 per cent last year. The city’s average net rental rates remained unchanged at $25 per square foot.
There was a 1.5 per cent improvement in Saskatoon’s employment but the unemployment rate increased to 7.8 per cent from 6.5 per cent as population growth outpaced that of employment.
There has been minimal interest from big-box fashion retailers for a number of years now as demand has been weak outside of Midtown Plaza. In fact, most new retail developments have been anchored by grocery stores or pharmacies and filled in by quick-service restaurants, banks and other financial services providers, medical and dental offices and beauty salons.
“The growing popularity of online shopping has reduced the viability of traditional retail,” the report said. “This prevailing trend is forecast to require retailers to significantly reduce their storefront footprints and rely more on localized warehouse opportunities to expedite online delivery.”
There is about 120,000 square feet of retail space presently under construction, which is scheduled to come on stream this year, adding to the 250,000 square feet that was completed in 2017, most of which was part of Phase 5 of Preston Crossing, according to the Colliers report.