We’re often tasked with researching space for tenants using a monthly budget. But when we use a price per square foot as an industry to compare properties against each other, there are a few steps required.
Thinking like a tenant, ICR research analyst Alvaro Campos put the question to our office this week: How much does $5,000 a month get you in Saskatoon’s office, retail and industrial sectors?
Industrial product typically demands the lowest prices in any market. The spread between new and existing product is very tight these days, even with an overall vacancy rate of 8.2 per cent.
New properties are averaging $12 per square foot asking lease rates, with approximately four dollars per square foot in occupancy costs. You’d get 3,750 square feet for around our hypothetical $5,000 per month.
Older or existing properties are listed at $10 per square foot, with occupancy costs of $3.50 per square foot. This equates to 4,444 square feet in the $5,000 a month range.
Saskatoon’s office market has several differentiations. At the highest end, downtown class-A office is currently listed on average at $25 per square foot with $13.25 in occupancy costs. Keeping our monthly goal in mind, that would provide you with 1,568 square feet.
You see a little more in class-B office with 1,967 square feet at a rate of $19 per square foot and $11.50 per square foot in occupancy costs. That size increases, however, when you move out of the downtown core towards suburban listings.
Typical spaces in suburbia are renting at $19.50 per square foot with $10 per square foot for occupancy costs. This would result in 2,034 square feet within budget.
Retail merchants pay the highest leasing rates, at $26.75 per square foot for net rent plus $11.75 per square foot in occupancy costs on new inventory. This totals 1,558 square feet of leased space within the $5,000-a-month parameters.
You get a little more bang for your buck in existing buildings, with lease rates at $21.25 per square foot and $8.25 per square foot in occupancy costs. The $5,000 monthly budget gets you 2,088 square feet.
You get what you pay for
It’s important to know what type of commercial real estate best suits your business. Budgeting for realistic lease rates is vital to a successful business plan.
With a range of 1,558 to 4,444 square feet for a $5,000 monthly budget, there are many options in our market on which to hang your shingle.