We’ve just released our Q2 2021 market surveys and all three commercial real estate sectors are reporting reductions in vacancy. Remarkable statistics considering the economic storm we’ve been passing through!

It appears our resource-rich economy is only going to continue to improve with the recent upcycle in commodity markets.

International demand for food, fertilizer and fuel have turned the corner after a slow 2020.

Let’s take a look at each sector individually.

Industrial vacancy showing decisive trend

Historical vacancy rates in Saskatoon for the industrial, office and retail sectors. For a full-sized version of this graphic click this link. (Courtesy ICR Commercial)

The Saskatoon industrial market continues to show positive net absorption. The vacancy rate decreased to 4.39 per cent, which we’ve not seen since 2010.

The average net rental rate remained stable at $10.70 per square foot and the average occupancy cost is $4.37 per square foot.

The highest asking rate can be found in the Marquis area – the largest industrial subdivision – where vacancy is now down to 3.35 per cent.

Despite the low vacancy, only three industrial building permits have been issued to date in 2021. This low number is a result of high building costs and onerous building code requirements.

There’s also a significant difference between current asking net rental rates and the rate required for developers to justify constructing a new building.

Office not all doom and gloom

I could not have predicted that we’d be reporting a reduction in vacancy in the office market.

In fact, the overall rate decreased by 83 basis points to 14.43 per cent with a net positive absorption of 29,190 square feet in the second quarter of this year.

The downtown vacancy is, however, over 200 basis points higher than suburban office. Downtown is at 15.49 per cent and suburban dropped to 13.27 per cent.

Asking rental rates downtown varied from $10 to $30 per square foot with the current average sitting at $19-$20 per square foot net.

If you are looking for suburban office, you’ll find current asking net rental rates ranging from $9 to $32 per square foot (price of new office space, which typically includes a tenant improvement allowance).

Post-pandemic retail activity

The retail market continued to demonstrate stability with an 11-basis point reduction in overall vacancy to 5.07 per cent.

Average asking rate is $21.52 per square foot and average occupancy costs are $9.47 per square foot.

Many merchants have been able to adapt and pivot over the past year by providing new services and integrating new technology into their businesses.

We’re reporting the highest vacancy in downtown Saskatoon at 8.34 per cent with an average asking net rental rate of $20.66 per square foot.

The lowest rates can be found in West Suburban, East Suburban and the North retail sectors.

Within each of our quarterly reports, ICR Commercial provides specific details on eight to nine areas of the city as well as average occupancy costs, average asking rates, total square footage of absorption and vacancy. Feel free to reach out to one of our associates if you’d like a copy of any of the detailed reports.