http://www.westerninvestor.com/news/albe...-stable-to-struggling-markets-1.20046123
Prairie industrial: from stable to struggling markets
Big-city Alberta landlords continue to suffer from low oil prices while Regina and Winnipeg see vacancy rates falling and land prices holding firm
WI Staff, Western Investor June 13, 2017
Regina
Saskatchewan’s capital city has seen its industrial vacancy rate drop to 3.2 per cent this year, down from nearly 4 per cent a year earlier, and “continues to perform at a stable level,” Avison Young reports.
The average net lease rate, at $11.45 per-square-foot, remains the highest on the Prairies but has been declining for five years.
In the first quarter of this year, total absorption of industrial space was less than 180,000 square feet, the lowest take-up in years.
Landlords are offering a variety of incentives to recruit and retain tenants, agents say.
A lack of interest in new construction has seen just 200,000 square feet of new space started this year – down more than 60 per cent from the first quarter of 2016 – which may force a reduction in industrial land prices.
The City of Regina is still asking $450,000 per acre for its industrial-zoned land. In comparison, neighbouring Sherwood, a rural municipality, has industrial land from $160,000 to $250,000 per acre.
Saskatoon
“It’s been a long, hard road for the Saskatoon industrial real estate market,” said Barry Stuart of ICR Commercial Real Estate, Saskatoon. He noted that the industrial vacancy rate has ballooned from 4 per cent to more than 10 per cent with “a significant softening of lease rates” to an average of $10.85 per square foot.
The Saskatoon industrial vacancy rate is currently 10.5 per cent, and absorption of space has gone negative, with more than 18,000 square feet shoved back onto the market in the first quarter.
Industrial makes up 53 per cent of all the non-residential real estate in Saskatoon, so it is seen as a harbinger for the city’s economy.
The City of Saskatoon has 15 serviced industrial sites available, asking from $480,033 to more than $676,000 per acre. However, only one industrial construction permit was issued in Saskatoon in the first three months of this year, which may signal lower vacancy rates if supply continues to fall
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