Inflow of people
"Regina is attracting workers from across Canada and around the world," said Mayor Michael Fougere, noting many people are returning to a city they left for greener pastures years ago. Population growth in Saskatchewan hit 6.7 per cent for the cumulative five years to 2012, the largest growth spurt since Statistics Canada began keeping such information in 1954.
"We have a 4 per cent unemployment rate in Regina," Fougere said. "We simply have more jobs than people to fill them."
But, the former president of the Saskatchewan Home Builders' Association notes, the growth is straining housing affordability.
Regina's rental vacancy rate is a tight 0.7 per cent, the average rent for a two-bedroom apartment has risen to an all-time-high average of $1,020 and house prices have been growing for three years. A typical older apartment building sells for $120,000 per suite.
The city plans to launch a pilot project later this year to ramp up construction of secondary or "granny" suites on existing properties. Fougere's also arranged a week-long housing summit next month with senior levels of government and other stakeholders.
No rent controls
Initiatives will also be expanded to boost the supply of rental and affordable housing in Regina, but rent controls aren't on the agenda. "There's pros and cons to that," said Fougere. "It can be very much a distortion of the market and it can do more damage than actual good."
The city offers a five-year tax exemption for new rental projects and a tax exemption of $7,500 per suite for five years for anyone who converts space into housing in Regina's old warehouse district, which may be extended citywide. Developers may apply for an exemption on several units at once or a whole phase of construction. Regina also partners with the province to provide a construction rental incentive of up to $5,000 per new rental suite built.
For residential developers, the market is solid. Housing starts, dominated by detached houses, average about 100 units per month, and the city's official community plan has assured enough zoned land for the next 50 years.
"Regina is a steady housing market," said Reese, adding that despite the demand there is very little speculation going on.
Commercial
A lack of speculative construction could explain why downtown Regina has the least Class A office space of any Canadian city. Spec builders apparently missed memos from the Conference Board of Canada and Royal Bank calling Regina one of Canada's top economic performers for the past three years.
The first office tower in 20 years has just opened and, despite a North American low of 1.4 per cent vacancy rate for Class A space, other developers "are waiting for tenant commitments to be confirmed" before pulling the trigger. Top new office space would see lease rates of $30 per square foot, according to Avison Young (AY).
Supply is falling behind, says AY principal Dale Griesser. "The office construction planned and underway is at the highest pace for adding inventory in recent memory, and long overdue to satisfy overheated demand."
Industrial
But spec builders are active in the industrial sector, where vacancy rates are in the 2.64 per cent range and lease rates have reached north of $12 per square foot. Spec construction includes 61,000 square feet of industrial "condos" being completed this year. "Demand for new space has driven up prices of existing product to be at, and sometimes above, the cost of construction," noted Jeff Sackville, AY industrial sales and leasing specialist.
Retail
Regina's retail sector is considered a turbulent market in transition. Last year's 8 per cent jump in retail sales - and 13 per cent rise in lease rates - has helped spur retail investment. More than $6 million in renovations are reshaping Regina's Southland Mall: American retail giant Target will move into Northgate Mall this summer.
Of the 8.2 million square feet of retail in Regina only 3 per cent is vacant, another indication of a strong economy where landlords clearly have the upper hand.
from Western Investor April 2013
