Owner occupants and developers alike have felt the pressure of low vacancy rates
- The vacancy rate in the Saskatoon industrial market remained low at 2.5% with a negative net absorption of (93,860 s.f.) quarter over quarter.
- Vacancy in the Regina industrial market continued to decline. In the second quarter of 2022, vacancy was at 2.3%, with a positive net absorption of almost 50,000 SF quarter over quarter.
Average asking rates were $11.59 p.s.f. with average operational costs of $6.50 p.s.f. This represents a new asking rate high increasing from $11.54 last quarter. While the quarterly increase is modest, rates are up 13.0% over the past 18 months as demand for industrial space has been unprecedented.
Despite high construction prices, and supply chain interruptions and rising interest rates, both owner occupants and developers are anticipating the City of Saskatoon’s release of much needed new development lots south of 71st Street.
In Regina, industrial submarkets Ross and Tuxedo experienced positive absorption as demand continued to rise in the area. The demand for top-quality warehousing and distribution space in a tight market has shown the need for further construction to match that demand. Even with a new development now being built in Pasqua Business Park, it will do little to relieve the pressures of a tight market.
Also in Regina, the Global Transportation Hub has added a new major international organization to their footprint. A major e-commerce user has purchased 14.35 acres for $3.3 million. At this moment there are no details as to what the land use will be.
Owner occupants and developers alike have felt the pressure of low vacancy rates and are expected to explore new development opportunities as tight market condition are expected to continue. While demand for industrial space is expected to remain strong in the second half of the year, rising interest rates and a potentially slowing economy have introduced some uncertainty for the coming quarters.