While both the industrial and office sectors have displayed somewhat volatile vacancy rates during the past five years, the retail sector in both Saskatoon and Regina has consistently performed well.
Aside from Regina straying slightly over four per cent in 2017, both cities have otherwise achieved a number below four per cent since 2013.
Let’s take a closer look at each city.
Regina’s retail snapshot
This sector of Regina’s commercial real estate market is forecast to expand by up to 16 per cent or 1.69 million square feet within emerging neighbourhoods.
Our Q1 2019 reported 3.9 per cent vacancy. Rental rates reflect strong demand with asking rates for new developments ranging from $30 per square foot up to $42 per square foot.
Existing inventory is priced from $12 to $28 per square foot.
Saskatoon’s retail snapshot
3.3 per cent. That’s correct, our Q1 2019 market report states that after reaching a high of just under four per cent in 2017, we have seen a steady decline in retail vacancy to its current 3.3 per cent.
But look at this: in 2011, the average retail vacancy rate was under 1.5 per cent.
We divide Saskatoon’s retail sector into 12 zones. That 3.3 per cent average obviously means some zones are higher and some are lower.
Three areas that are currently reporting a less balanced market are 51st Street at 7.2 per cent, 8th Street at 7.5 per cent and 33rd Street at 24.4 per cent.
It’s interesting to note Confederation Park is reporting the lowest vacancy at just 0.8 per cent.
What does this translate into?
A potential investment opportunity that offers long-term stability.
I believe you’ll agree we’ve weathered some challenging economic times in this province during the past decade. As you can see, despite those challenges, the retail commercial real estate market has performed well.
The location, any presence of functional obsolescence, or deferred maintenance will affect the long-term success of any commercial real estate acquisition.
Forecast for the future
We live in a province with rich and diverse resources. The world demand for food, fuel and fertilizer is not waning.
There is a rural-to-urban global transition taking place.
Those factors translate into long-term, continued growth in emerging neighbourhoods and densification of existing neighbourhoods for both Saskatoon and Regina.
Despite the technology disruption currently taking place in retail, I’m placing my bets on it!