How would you define alternative real estate assets? What categories are gaining traction in Saskatchewan and across Canada?  

Alternative assets are non-traditional commercial properties that are gaining significant interest from investors looking to diversify from the typical office, industrial, retail and multifamily sectors. These assets tend to be stable and upward-trending, with high growth potential. Trends in this class of assets are generally counter-cyclical or less correlated to core real estate returns. Alternative properties include post-secondary education institutions, student housing, self-storage, data centres, life sciences and medical centres, childcare, and seniors/palliative care centres.

Colliers’ Alternative Asset National Practice Group is a national network of real estate experts focused on alternative assets. We share best practices, our network and the latest market data to help our clients navigate this unique sector.

In Saskatchewan, the need for self-storage and childcare facilities has grown over the past five years. Self-storage has been on an advanced growth trajectory globally and more attention has been focused on secondary markets in Canada. Childcare facilities have not been able to keep pace with demand for quality options. Steady population growth (2.6% in 2023) to a record ~1.2 million residents in the Saskatchewan has put a strain on existing childcare facilities. The current government has an ambitious goal of achieving 1.4 million residents by 2030 and this would further increase the need for self-storage and childcare options. 

What challenges and opportunities are specific to alternative assets in Saskatchewan?

Challenges in Saskatchewan stem from the province's population growth and density levels. Densification in major urban centres has created a greater need for self-storage and overall living space. Regina is an underserved market for self-storage options, and larger owner-operators are taking notice. A new self-storage development is underway featuring a 113,000-square-foot Class-A multi-level property, the first of its kind in the Saskatchewan market. Even with the additional availability, market penetration does not compare to higher population centres such as Toronto and Vancouver. 

Childcare has its own unique challenges. With the emergence of the $10-a-day childcare program led by the provincial and federal governments, subsidized facilities are often far more affordable than private home services. However, a shortage of locations, childcare spaces and qualified employees pose challenges. Most well-established centres have multi-year waitlists or have closed waitlists completely. Childcare properties must meet ministry requirements including favourable zoning, landlords that understand the use, and cost-effective operation over the long term. There is an urgent need to build and begin operations before the development grants for construction and redevelopment expire. Working with my clients, I’ve helped address this need by finalizing transactions for four new facilities that will accommodate 360 licensed and affordable childcare spaces this year.

How has the investor profile evolved over the past few years?

Typical investors in self-storage are private equity-backed operators or larger REITS that buy or construct facilities. Investing allows them to diversify their real estate holdings and maximize their returns. We are seeing an increase in private investors and first-time buyers as social media sheds light on the commercial potential of the sector. Operation of the properties themselves tends to be an issue; good management is the key to long-term success for both self-storage and childcare facilities.

What external factors drive alternative asset transactions in the Prairies? 

The main driver is potential returns. Cap rates and cost of properties are much lower in the Prairies than the more heavily populated portions of Canada. Affordability and long-term potential of secondary markets, like Saskatchewan, have been steadily attracting attention over the past five years. Sole owner-operators, particularly in the self-storage market, have had solid presence here for decades. Many recent transactions are triggered by their investment exit strategy for retirement. 

For childcare space, government investment in early learning and childcare systems, along with population growth and immigration, has been driving up market demand, as has the $10-a-day program set to create 250,000 new childcare spaces across the country by March 2026.

Our biggest advantage in Saskatchewan is the lower cost of land, and the biggest challenges are navigating the requirements of zoning, building codes and future growth. Working with a real estate expert, like our alternative asset team at Colliers, gives investors an edge over an “if you build it, they will come” strategy.

What are the critical due diligence factors you use to evaluate alternative assets? Do they differ from traditional commercial properties?

For self-storage, we use the same due diligence framework as commercial properties: financing requirements, environmental studies and building inspections. A deep dive on operations, location and competition are critical to a successful investment strategy. Benchmarking rents and understanding the physical location, transportation access points and zoning requirements enable us to forecast the performance of the asset. Our team looks at balancing rental increases with added value options like insurance or complementary merchandise, attractiveness of the asset’s street presence, identifying shortfalls in market positioning, security and site management to ensure stabilization of previously underperforming facilities. 

Which alternative asset categories show the most promise for growth over the next 5 to 10 years?

Across all asset classes, the "flight-to-quality" trend is expected to continue, which will likely benefit newer, more sophisticated self-storage facilities in Saskatchewan and other markets. As densification and population growth progress, multi-storey, climate-controlled self-storage properties with modern security and operational features will likely lead the market.

The future of childcare facility development is more uncertain, as it depends on government grants set to expire in 2026. Without extended support, the pace of new childcare space creation will likely slow, despite demand. Advocating for public investment in early education infrastructure will be critical.

How does your expertise in alternative assets help your clients navigate this niche sector?

This sector requires a unique knowledge base and network to achieve investment success. With a proven track record of transactions in alternative assets, I guide my clients from start to finish, engaging in ongoing communication post-transaction to ensure their success and stability.

Non-profit organizations especially need guidance in achieving their goals through real estate. Many have the need, but few have the insights required to navigate the market and its regulations. Through my connections in the private and public sectors, I ensure the right questions are asked, requirements are met, and opportunities are unlocked to deliver high returns on their investment.