With a retail vacancy rate of 1.97 per cent, the lowest in Saskatchewan and perhaps in North America, Saskatoon is also on track for record retail sales this year.
A report from ICR Commercial Real Estate notes that national and international retailers are flocking to Saskatchewan's largest city, which is driving lease rates higher and vacancies lower. The city posted record retail sales in 2012 and that record is expected to be topped this year.
Saskatoon has the lowest retail vacancy rate in the province, followed by Regina at 2.52 per cent, North Battleford at 3.08 per cent, Prince Albert at 3.60 per cent, Yorkton at 3.89 per cent and Lloydminster at 3.94 per cent, according to ICR market research analyst Alvaro Campos.
The ICR report said population growth and an increase in personal income will contribute to continued growth of retail sales in Saskatoon. A number of retail projects are well underway in the city and many will come on stream this year.
Two Target stores are scheduled to be open this spring or early summer in Saskatoon. Re-development costs are pegged at $10 million per location and each Target store will employ between 150 to 200 people.
There are also plans for a new north downtown mixed-use development, part of a 240-acre parcel of land that the city is rezoning.
ICR projects that Saskatoon's retail market will continue tight in 2013 with vacancy rates remaining around 2 per cent. The report forecasts limited construction while absorption is expected to be positive but not as noteworthy as the 278,500 square feet taken up in 2012. Low vacancy rates will mean higher lease rates, the report said.
Average retail lease rates for 2012 rose by 8 per cent and this trend will continue in 2013, ICR states. Fuelled by high demand, new retail developments are expected to attract lease rates in the range of $25 per square foot to $33 per square foot range, while existing vacancies range from $18 to $25 per square foot.
