I’ve never professed to be a psychic, but I think looking over the trends of the past year I can safely make a few bets on the commercial real estate market for Saskatoon in 2020.
The first is that office shuffles will continue as new construction continues to be absorbed, but creates vacancy in its aftermath.
The 13-storey, 155,356-square-foot East Tower at River Landing is ready for tenant improvements. In fact, at least one tenant is already open for business.
The construction schedule has sped up on the 18-storey, 261,078-square-foot Nutrien Tower and is now on target to be ready in 2021.
Not new, but definitely reborn, the River Quarry on 4th has 64,020 square feet ready for occupancy. This transformed building has seen a massive renovation on the inside (mechanically and aesthetically) in addition to an exterior facelift.
With a flight to quality, these buildings are expected to entice tenants away from older, existing downtown towers.
The downside for landlords is that the pace of new tenants coming into the market to fill that vacancy may continue to be slower as we head into the new year.
Stable Saskatoon industrial
Saskatoon’s industrial vacancy continued to trend down in 2019. As a blue-collar town, I would expect a healthy pace of absorption in 2020 as well.
Tenant requirements are getting very specific with implementation of new technology, so many existing properties will not meet their needs in the near future.
There has certainly been more of a requirement for custom-built facilities to suit tenants.
Speculative building has begun catering to these more modern necessities as well, and while it has definitely slowed over the past two years these properties continue to fill up.
There will be inevitable softening in rates for older, less functional properties as they near the end of their useful lives.
Shopping for deals
Even with a slight increase in vacancy, the retail market in Saskatoon should stay strong into 2020. Most of the vacancy is due to new construction in the expanding suburban neighbourhoods and on 8th Street.
Under-retailed for so long, the Saskatoon market needed this type of product but the national economic slowdown has been felt locally.
A surprising area of healthy occupancy does seem to exist in our enclosed malls, which bucks the trend nationally.
The Midtown Plaza has spent considerable investment over the past year renovating the vacated Sears space and it appears to be paying off with new tenants as well as the expansion of others.
If you tried to get into a mall parking lot during December, you’d definitely agree they seem like healthy centres at best.
It’s harder to recognize small gains when we’ve enjoyed a few years of unheard-of growth provincially.
That said, all signs point to slow but steady economic increase in 2020 which tends to reflect favourably in retail sales especially.
I would love to hear if you share or, even more so, don’t share my outlook!