Speculating developers are getting busy in Regina as the industrial vacancy rate has fallen to a Canada low of 0.8 per cent, despite a 10 per cent increase in supply over the past two years.
"With effectively no available industrial space within the city, tenants have little choice but to build their own space or take advantage of build-to-suit options outside the city limits," according to a study by Colliers International.
The biggest boost to Regina's industrial inventory is the completion of the nearly million-square-foot Canadian Logistics Services (CLS) distribution warehouse, the first major tenant at Regina's 3,250-acre Global Transportation Hub.
The two phases of the CLS project will encompass 965,000 square feet, with the first 423,000 square feet already completed and in use. By last month, traffic increased to about 80 trucks daily coming in and out of the giant complex in west Regina.
"There will be an increase in speculative construction in 2011," Colliers forecasted, noting that most new developments will be fairly small, multi-tenant buildings of about 20,000 square feet.
Prices for partially serviced industrial land in outlying areas are now in the $120,000-per-acre range, up from the $80,000 average a year ago. Some prime serviced sites in the city are selling for more than $220,000 per acre, however.
"With the cost to build new industrial space ranging between $100 per square foot to $150 per square foot for finished space, the resale of existing buildings may exceed $135 per square foot in 2011," Colliers cautioned.
Rising costs are also driving rental rates higher, with new product at $13 net per square foot, and existing space renting for up to $9 per square foot, net, according to Colliers.
Most of the speculative industrial development in 2011 is expected to be built in the rural municipalities of Sherwood and Edenwold, Colliers notes.
from Western Investor July 2011
