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The year-end industrial vacancy rate in Saskatoon since 2010. (Courtesy ICR Commercial)
I promised you that I’d hold myself accountable in my January 2019 post forecasting Saskatoon’s industrial vacancy rate, and report back to you.
At that time, I predicted a decline in the overall rate from 6.8 per cent to 6 per cent. That’s after a significant two per cent decline during the 2017 calendar year, and a 0.9 per cent decline to 6.8 per cent during 2018.
So, how did I do?
In spite of RBC’s recent estimate that Saskatchewan’s real GDP growth was an anemic 0.6 per cent in 2019, Saskatoon’s industrial vacancy rate decline exceeded my prediction by 0.35 per cent to end up at 5.65 per cent.
RBC’s forecast for the next couple of years look more favourable (see accompanying chart below).
Due to the recent 120,000 square foot expansion of the Matrix Industrial Park (after completion of Building F which was 160,000 square foot), the Marquis industrial sector is showing an increase in vacancy over the last quarter from 4.19 per cent to 5.11 per cent.
The North Industrial Area is also showing a slight increase of 0.2 per cent to 4.92 per cent.
What’s my take for Saskatoon in 2020?
Regardless of whether we are discussing industrial, retail or office, I believe we are in a healthy commercial real estate market when vacancy rates are under 5 per cent. I believe our overall Saskatoon industrial vacancy rate will decline again over the next twelve months to 4.8 per cent.
There is one factor that could negatively impact that prediction; a significant increase in spec building and slow market demand to absorb the new inventory.
Nonetheless, I will report back to you in 12 months . . . you can hold me accountable!
(Data courtesy RBC Economic Outlook)
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