In a rare move, a portfolio of fully occupied industrial properties is for sale in north Saskatoon.
Pillar Properties has listed for sale five properties totalling 223,130 square feet. The properties sit on a total 15 acres of land and are comprised of four single-tenant buildings and one building with two tenants. The units range from 26,400 square feet to just over 100,000 square feet, according to the listing by Colliers International.
The tenant list includes a mix of six publicly traded and private companies of national and multi-national size including Wesco Distribution, Case New Holland Industrial and Saputo Dairy Products.
The buildings are all less than nine years old. Two of the sites are on Millar Avenue; two are on Wanuskewin Road and another is on 68th Street.
“I’ve been doing this almost 40 years,” said Ken Suchan, the listing agent and a senior vice-president with Colliers in Saskatoon. “This is the first time I’ve ever seen something like this (for sale in the city).”
Pillar Properties rebalancing its portfolio
He said Pillar Properties developed the sites and is now divesting them to rebalance its overall portfolio. Pillar declined an interview request to discuss the properties, but referred RENX to Suchan and Colliers for comment.
“They own office buildings, retail and warehouse and they are over-weighted on the industrial, so they thought: ‘Well, let’s clear out some of our property’, and they’re still interested in doing developments,” Suchan said. “Retail is probably the strongest asset class right now.”
Suchan said this portfolio came on the market about two months ago.
The Saskatoon Industrial market is still experiencing the after-effects of speculative construction in 2014-2016, according to Colliers’ 2018 Q3 Saskatoon industrial report. But construction dropped sharply in 2017 and so far this year, allowing the market to stabilize and settle at a vacancy rate of 8.3 per cent.
Advertised net rent has risen slightly recently, to $9.90 per square foot, and is continuing to creep toward 2015 highs of $10 per square foot, the report said.
Industrial moves closer to balanced market
The city’s industrial market is expected to move more toward a balanced market during the next year, with vacancy decreasing and net asking rental rates increasing — if speculative construction remains low, Colliers said.
Suchan said most of the leasing absorption in Saskatoon is existing tenants looking to increase their space, though he said there is still some downsizing going on as well.
He said Saskatoon went through an industrial boom when international mining and resources giant BHP announced it would build a multi-billion-dollar potash mine near the city. While major shaft work has been underway at the site, BHP has since said strict capital tests must be met before full construction and production can begin at the mine, according to a Postmedia report in August.
“Every engineering firm, every mining supply company, anybody that would support that project moved into Saskatoon, so we went through a real boom right (when the project was announced), and prices went nuts,” Suchan said. “There were a lot of buildings built on speculation [and] we had a glut of space for quite a while.”
Now, the market is moving back toward equilibrium.
“Last year was the first year we had hardly any buildings being built on spec,” Suchan added. “We still have positive absorption … so the vacancy rate is coming down. We’re now seeing a more normal market like we’re used to. There is just enough supply that people have a choice.”