These are rare times when what appears to be a negative economic indicator is actually a necessary, painful step on the road to recovery; a time when a story can be framed negatively or positively when viewed through the lens of reality.
The latest Marquis Industrial Building Permit Map issued by the City of Saskatoon on July 3 states there have been no industrial building permits issued during 2018 (within the Marquis Industrial area).
On the surface, that’s a hard pill to swallow!
As a result of a meeting we had with the City of Saskatoon Land Branch in 2015, we have been receiving data since 2016 which provides not only the number of building permits, but detail on what is being constructed in the Marquis area.
This information puts brokers and developers in a better position to determine which specific sectors of the market require an increase in spec-built inventory. The data should minimize the likelihood of repeating our current oversupply.
What’s good about this is we still require time to absorb the market surplus and this lack of building activity works to achieve that.
This story would not be balanced without stating the obvious; it also means owner occupants are not currently expanding. It would appear the confidence has not quite sufficiently returned for that expansion to occur.
It will be interesting to see where we are at by the end of October.
Due to the cost of winter construction, most companies who plan to build are likely to have their building permits by that time.
Saskatoon 2018 Q2 Industrial Stats
Some stats from our Q2 report (click this link for a full-sized graphic of these figures):
– Vacancy is up slightly at 7.5 per cent; 1,794,971 square feet are currently available.
– Year-to-date absorption is -23,869 square feet.
– The average asking rent is $10.61 per square foot, with a $3.99-per-square-foot average occupancy cost.
Our recent Industrial Survey reports:
“Despite a modest increase in available space over the first half of the year, the city’s industrial market continues to exhibit signs of stability. Year-to-date vacancy increased by 30 basis points to 7.5 per cent.
“A recovering economy has been positive for the city’s industrial market. Demand for industrial space has remained stable, a trend likely to continue in the second half of the year. Rates are projected to hold steady as landlords continue to offer incentives to be competitive within the market.”
The report indicates our highest vacancy can be found in the CN Industrial area at 14.6 per cent. Vacancy is lowest in the Sutherland district at 1.9 per cent.
Feel free to contact my office if you’d like a copy of our 2018 Q2 retail, office or industrial reports, or more details on any of the information above.