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saskatoon saskatchewan
colliers international | market report
Colliers McClocklin Real Estate Corp. | www.collierscanada.com/saskatoon | +1 306 664 4433
The Return of Industrial Condominiums
MaRkEt indiCatoRs2012 Q1 2012 Q3
VaCanCY nEt aBsoRPtion ConstRuCtion REntal RatE
the story of the canadian industrial market has been divided between east and west. eastern canadian markets are beginning to recover from their 2008 decline as toronto’s rental rates began trending up from a three (3) year constant average of $4.60 to $4.90 net per square foot in Q3 2012. toronto is experiencing slower and very deliberate industrial growth with 35% of the 4.7 million square feet of industrial construction design built for large single-tenant users.
in contrast to the east, the west rebounded in 2010 as industrial construction gained momentum, but at a slower pace than 2006-2008. a good example is edmonton’s absorption from 2010-2012 that has averaged a million square feet per year while industrial construction has averaged 650,000 square feet per year; ending Q3 2012 at 3.5% vacancy.
through 2012 the saskatoon industrial market performed at an extraordinary level, completing 480,000 square feet of industrial space with an additional 500,000 square feet presently under construction.
the most recent trend of industrial development has been the resurgence of industrial condominiums. condominiums have become attractive in the saskatoon market due to the financial accessibility of small scale industrial units and historically low interest rates. seven (7) new industrial condo developments are underway and account for 200,000 square feet or 40% of the industrial space presently under construction.
Absorptionrobust leasing activity has kept vacancy in check with more than 500,000 square feet of industrial absorption over the past three (3) quarters. typically, some of the larger industrial buildings are slower to lease in the saskatoon market, but landlords have been aggressive in their lease rates and have successfully filled the latest large-scale industrial complexes.
SASKATCHEWAN MARKET: Colliers is the largest commercial real estate firm in saskatchewan with offices in saskatoon and Regina. in 2011, the saskatchewan team completed more than 475 transactions and managed over 6.5 million square feet of property.
Q3 2012 | INDUSTRIAL
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Vacancyas predicted, a year of plentiful industrial construction coupled with an equal level of absorption has kept the saskatoon industrial vacancy rate constant through 2012 ending Q3 at 4.83%.
450,000 of the 1,000,000 square feet of vacant space is attributed to two (2) industrial buildings that are undergoing plans for redevelopment.
as new construction completes in early 2013 vacancy may rise in the short term, but consistent demand should return the vacancy rate to around 5% by mid-year 2013. Vacancy in saskatoon could fall as low as 3.1% if leasing activity increases on the two (2) large industrial complexes.
Landon June 7th, 2012 the saskatoon land Branch closed on their latest land tender of three (3) parcels totaling 5.68-acres. the three (3) parcels were purchased through tender by a local developer. By June 15th
all land through the city of saskatoon land Branch had sold or leased. if the weather permits, the city expects to tender 72-acres of industrial-zoned land west of millar avenue by December 2012. in the interim, limited opportunities still exist in the third party sales market or in the r.m. of corman park.
concorde’s Biz Hub industrial park located in the r.m. of corman park along Highway 16 West has sold 85% of their subdivision with four (4) remaining parcels available for purchase. phase ii is in the development stage and could be available by mid-summer 2013.
Saskatoon records slight drop in vacancy rate to 4.83%
and remains strong in new construction
nEW suPPlY, aBsoRPtion and VaCanCY: saskatoon industRial Q1 2012
Source: Colliers International, September 2012
3903 Millar avenue
810 57th street
15,000 sF50% leased
302 Melville street
3150 Faithfull avenue
310,000 sFFor lease
10,000 sFFor lease
10,950 sFFor lease
10,000 sFFor lease
502 48th street East
Rendering
lEasEd
lEasEd
lEasEd
P. 2 | ColliERs intERnational
MARKET REPORT | Q3 2012 | INDUSTRIAL | SASKATOON
Rental Ratesrental rates continue to ride a fl at trajectory with no indication that they will rise or fall in the immediate future. Both saskatoon and regina are amongst the highest industrial rental rates in the country with existing space leasing between $9.00 and $11.00 net per square foot and new space priced between $10.50 and $12.50 net per square foot.
Sales & Investmentcapitalization rates in the saskatoon industrial market compressed further from 7.5% in 2011 to approximately 7.25% Q3 2012. the lack of available investment opportunities has resulted in continuous downward pressure on capitalization rates.
likewise, values in the industrial owner/user or speculative investment markets have soared with some industrial building sales hitting the $168 per square foot mark. in 2012, average industrial sale prices increased from the 2011 average of $135 per square foot to $145 per square foot.
450,000 SF in Saskatoon are undergoing plans for
redevelopment
MaRQuis industRial - MaP oF PHasEs
Source: City of Saskatoon
3702 Millar avenue
3203 Wells avenue
3703 kochar avenue
805 51st street East
103 Marquis Court
14,000 sFFor sale
6,800 sFFor sale
16,100 sFFor sale
14,480 sFFor sale
113,500 sFFor sale
Rendering
llsoldd
lsoldd
Rendering
ColliERs intERnational | P. 3
MARKET REPORT | Q3 2012 | inDUstrial | saskatoon
CONTACT INFORMATION
tom McClocklinpresident | saskatoon+1 306 664 [email protected]
Jim BagshawBrokerage manager | saskatoon+1 306 664 [email protected]
duncan Mayerresearch manager | saskatoon+1 306 664 [email protected]
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• $1.8B in annual revenue
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This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). © 2012. All rights reserved. Colliers McClocklin Real Estate Corp.
accelerating success.
ForecastVacancy is expected to remain relatively constant over the next six (6) months but may rise temporarily when the majority of proposed speculative developments complete construction in 2013.
the 72-acres in phase Vi of marquis industrial (west of millar avenue) will provide the saskatoon market with needed inventory to expand through 2013.
the price per square foot value of existing industrial buildings has likely reached a ceiling and further increases may prove to be un-sustainable in the future. construction of new industrial buildings may increase in tandem with rising construction costs and land values.
Source: Colliers International, September 2012
saskatoon ConstRuCtion aCtiVitY
Colliers McClocklin Real Estate Corp. | www.collierscanada.com/saskatoon | +1 306 664 4433
MARKET REPORT | Q3 2012 | INDUSTRIAL | SASKATOON
