Two new office towers currently under construction in Saskatoon might just be the further boost that the city’s commercial market needs, according to a recent report by CBRE Research.
The analysis came in the wake of CBRE’s 2019 Canadian Real Estate Market Outlook, which indicated that Saskatoon currently benefits from a relatively healthy commercial/industrial vacancy rate of 7.7%, with rents at $9.25 per square foot.
The study noted that the city’s commercial/industrial sector has enjoyed sustained recovery in 2018, after the last large wave of construction (which ended back in 2013) that led to half a decade of supply glut and soaring vacancy rates.
CBRE stated that Saskatoon’s in-progress River Landing properties – slated to offer a total of 450,000 sq. ft., over 60% of which have already been pre-leased – are the first true “Class A” office spaces in the city’s downtown area since the 1980s.
The River Landing towers are scheduled to begin operations late this year and early 2021.
An implication of this vast new space is that a considerable proportion of firms currently renting lower-tier properties might choose to upgrade their spaces, GlobalNews.ca reported.
Such a migration towards the downtown area can also leave the peripheries free for further development into top-tier offerings themselves – a trend that Marcus & Millichap argued will manifest in city outskirts nationwide over the next few years.
“Elevated pricing expectations and fewer high-quality listings in downtown areas motivate investors to broaden search parameters to suburban locations near major metros. Higher yields beyond the urban core will be a large driver to sales activity in 2019,” Marcus & Millichap explained in its mid-March report.