In spite of the negative economic impact of COVID-19, the sale and lease activity within our existing industrial market continues. Saskatoon’s vacancy rate rose marginally by 0.12 per cent, to 5.86 per cent, according to ICR Commercial‘s recent Q2 report.
With over 24.6 million square feet of total industrial inventory, 1,444,158 square feet of vacancy is considered relatively healthy.
An economic bellwether of COVID-19 can be found in the percentage of rent relief requests from each of the industrial, retail and office sectors. The number of those requests from industrial tenants in Saskatchewan was far lower than the other two.
Similar results have been reported throughout North America.
Interest in industrial assets will only continue to rise as we see warehouse and distribution facilities grow to meet the e-commerce demand to deliver goods to online consumers.
Marquis industrial area
The Marquis Industrial area is the newest developed industrial area in Saskatoon.
It’s interesting to note only one building permit has been issued in the Marquis Industrial area so far in 2020. This demonstrates that business owners and investors are still reluctant to invest in new construction.
The Q2 vacancy rate sits at 5.76 per cent, 10 basis points below the average city rate.
The average asking net rental rate is one of the highest at $11.64 per square foot.
Highest reported vacancies
Two areas which showed positive absorption between Q1 and Q2 are still reporting double-digit vacancy.
With 141,315 square feet of vacancy and 10,869 square feet of absorption, Agriplace is sitting at 10.43 per cent.
The CN industrial area still has 160,360 square feet available, representing a 10.91 per cent vacancy rate.
Where does the industrial market go from here?
There are many factors that will play into the direction of this market.
The belief among those most affected within this sector is that we will continue to see stability throughout 2020. The expectation is that warehouse market growth will emerge 2021–2022.
I believe however it will be Q4 of this year before we truly have a clearer picture of the impact of COVID-19 on the world economy.