Where do Saskatoon industrial lease rates go from here?

Oil and gas prices will continue to drive economic growth in SK and AB through 2024, according to the Conference Board. Saskatchewan will also benefit from higher prices for commodities such as wheat and potash.

Saskatchewan is reported to lead our country in 2022 with a growth of 7.6 per cent.

However, we’re experiencing inflation at a rate we’ve not seen in the past 15 years.

The cost of construction and land has been rising.

There is a shortage of labour which is putting pressure on construction wages.

The logical conclusion is that the cost to lease industrial real estate will likely break through to a new high in the months ahead.

Whereas the current average rental rate according to our 2Q22 Industrial Market Survey is $11.82 PSF, we know that a developer needs to see a $13.50 PSF net effective rate on shell space to justify building new warehouse today.

Let’s look back in time

There was a 20-year period before 2005 in which warehouse rental rates flatlined.

I know of one example where a Saskatoon industrial tenant renewed their lease for four five-year periods at $4.50 PSF net.

They may have been a bit on the high and sometimes on the low side, but their rate did not move over 20 years.

The fact our net effective industrial rates have been bouncing around in the same territory for almost ten years is fascinating.

Between 2007 and 2012, the average rate jumped from $5.62 PSF to $11.21 PSF.

That’s very close to a 100 per cent increase in seven years. Could it happen again?

If you put seven different economists in a room and asked that question, you will get seven different answers.

Economies of scale matter

When quoting average rates, it’s important to mention that there can be a considerable difference in price between 2,000 SF and 200,000 SF.

There are significant economies of scale in construction costs that must be factored in.

Amount of spec building will influence the future

If you came to me today and wanted to lease a new warehouse, it would take one full year to complete the project due to labour and supply chain issues.

ICR’s 2Q22 market analysis reports an average vacancy of 2.52 per cent.

It worsens if you isolate that statistic to the Marquis area (our main industrial area in Saskatoon), where the current vacancy is just 1.83 per cent.

If we do not see more spec building, the resulting supply/demand factor will affect those rates in a way we’ve not seen for over ten years.

It’s going to be very interesting to see where the line on this graph moves to in the next five years!

Carrying the Mission, Vision & Values through corporate leadership

I firmly believe that the most crucial job a leadership team has is to design and implement strategies to see the organization grow and flourish in the long term.

About four years ago, we completed the soft rebrand of ICR.

We didn’t set out to significantly alter our corporate image and logo, but we knew we needed a refresh.

It took time to engage the stakeholders within four different departments to develop our Mission, Vision, and Values statements that represented us all equally.

How does leadership facilitate that discussion about why we do what we do? We struggled with this question, but eventually, we were able to develop an idea and implement it.

Earlier this year, I discussed this solution in my “Conversations over Coffee” with Jana Dutton.

We decided to order pizza or subs and facilitate staff luncheons in small groups to discuss our “why.”  We attempt to include a few individuals from each department at each luncheon to provide a diversified discussion.

It’s been great working with Anna Kalyta, Craig Kuse, Danielle Webster, and the entire staff on this project.

We take each element of our Mission, Vision, and Value statements and share company stories around them, inviting everyone to participate in the discussion.

We then go through a simple exercise that allows each individual to identify their top three personal values.  We believe it’s essential to determine how closely the personal values align with the company values.

When my values are reflected in my work, I’m in flow. I love what I do when I feel I’m contributing to my client’s goals and fulfilling my values.

Plenty of research shows we are significantly more engaged and in flow when our values and our company values align. We are exponentially more productive and enthused about our work.

The luncheons have been fruitful.  We hope to continue these sessions as part of the onboarding process for new employees.  We’re considering other creative ways that we can continue the discussion as the company continues to grow.

Here’s a synopsis of what’s important to us:

VISION: Why do we exist as an organization?

We exist to propel our clients towards prosperity.

I can get excited about a purpose that sees you profit, thrive, and grow. What is your primary purpose in life? How can I be a part of your success in getting there? I can think of an excellent client whom I asked that question several years ago. He has far exceeded that goal, and I have been a part of that journey. It’s a rewarding feeling!

MISSION: What do we do as an organization?

We secure exceedingly smart real estate solutions for our clients.

The reason we win business is that we brainstorm the solutions collectively. They are we, not I solutions.

VALUES: How do we do what we do as an organization?

We offer every client, tenant, partner and colleague the ICR handshake, our unique five-fold approach to growing trust as we do business.

The five fingers on the hand that offers to ‘shake on it’ represents our deeply held beliefs that underpin everything we do – Territory, Results, Unity, Solutions, and Trustworthiness. It spells out TRUST.

The traditional handshake remains one of the most powerful symbols. Those three words – shake on it – resonate with meaning, whether it’s two small boys in the playground coming to a mutual agreement after arguing about marbles or two world leaders desperately trying to avert a war.

The handshake most likely came into being in the Middle Ages when knights would extend an open hand to each other, demonstrating that they were not carrying a weapon. They were coming in peace and crucially, they would honor that peace. Shaking hands is an affirmation of something honorable, a statement of intent. Handshakes are dignified. A handshake says, “I give you my word.”

TERRITORY: (I love this…) We believe in the sacredness of space.

We know that every individual, company, and organization needs its own territory – a place where it can dream, create, produce and give expression to all that it is and longs to be.

We help others to find, manage and flourish in their territory. Simply put…we’re in the business of giving clients their space.

RESULTS: We constantly look for ways to accelerate the success of the people we work with – whether that’s our clients, tenants or colleagues.

UNITY: Unity is not conformity. It is agreement on the important things.

At ICR, we strive toward that kind of unity. That is why we lend the experience of senior staff to Property management and Sales and leasing while at the same time instilling in each individual a sense of ownership of their job.

Unity is required for collaboration, and collaboration, can, at times, be difficult.

SOLUTIONS: We’re a highly experienced commercial real estate company with unsurpassed knowledge that allows us to offer smart and perfect solutions.

Our experience and ear-to-the-ground knowledge shows – and counts.

TRUSTWORTHINESS: From that first phone-in to the final deal, from that initial meeting to our ongoing property management partnership, transparency and commitment overarch every touch-point.

This Globe and Mail graph demonstrates that “High Trust Companies” consistently outperform nearly three times better than the general market:

In the research that I have done, there is overwhelming evidence to show that Organizational Health is the most significant factor determining an organization’s success.

As we continue to evolve, we will see this company flourish and have fun doing it!

It’s Not What You Know, It’s What You Share (Women’s Classic)

For years now, ICR has hosted a men’s tournament to raise funds for local charities. Then in 2018, spearheaded by one of ICR’s female agents, Marla, she had an idea that a women’s tournament should had as well. This tournament was created with the intention to provide our sponsors and attendees an opportunity to help empower, educate, and inspire local female entrepreneurs and business professionals, to further improve themselves and their communities. With this idea in mind, she assembled a committee, and the tournament began to take shape.  Met with great enthusiasm, the inaugural ICR Women’s Classic took place in the summer of 2018 with another in 2019 and then came 2020…. And this new venture was forced to be put on hold.

This summer, the ICR Women’s Classic was back with a bang. A new committee, a new course, 12 holes instead of 9 and a new partner in the way of the Women’s Business Hub. We welcomed everyone back to the event on August 11th, 2022 at Greenbryre Golf Course. The committee was hard at work right from January contacting sponsors and in-kind donors for what has become a staple of the ICR Classic, the “swag bag”. We were thrilled to have so many partners jump on board and generously donate to the tournament. Due to everyone’s extreme generosity, the tournament came back to huge success raising $32,000.

As our partner, the Women’s Business Hub came out and gave a great presentation about their organization at the tournament dinner. And I am pleased to announce that on September 19th, 2022 on behalf of the ICR Women’s Classic, we were able to donate $10,000. The Women’s Business Hub provides a place where talented immigrant women come together to develop their skills under the guidance of business professionals. The Women’s Business Hub entrepreneurship program provides education, training and support to help entrepreneurial immigrant women launch their own businesses.

Because of the amazing fundraising the committee was able to do, there are additional funds available for dispersal and an application form available on our website https://www.icrcharityclassic.ca/womens

The committee looks forward to receiving applications so we can help even more local charities that support our mandate and help women succeed and thrive. And as always, on behalf of the committee, the future looks bright so bring your shades and come out and join us in 2023.

ICR Men’s Charity Classic Was A Success After 2-Year Break

After just completing the 19th annual ICR Men’s Charity Classic, I couldn’t be more pleased. Like many things in life, the last 2 years raised a lot of questions. Where do we go now? Will we be able to raise funds? Will people come back and play? Will this go on?

Started in 2003, I have been involved in playing in the event for 10 years before joining the committee and now help organize the event. Being involved in the event from 2004 and the fun I had; was the catalyst to wanting to participate in ensuring its success. Its important to note the initial driver of the event was to raise funds for a family with 2 kids that were born with Duchenne Muscular Dystrophy. I can happily say the father of the boys called to let our committee know they no longer need funds and were grateful for the years they did.

Where do we go now? The committee had to look back to its core principals. Who will be our main recipient of funds now? The funds raised are to stay local, and ideally directly benefit the people in need. Help One is now our main recipient, a nonprofit with no overhead that supplies kids in high school anything they may be lacking, from glasses to winter jackets to a pair of socks. A great cause.

So, did we raise funds? We did. I have nothing but gratitude for the 144 golfers, countless volunteers and many sponsors that stepped up immensely. Our goal for 2022 was to raise funds to get us over the cumulative $1M mark as we sat at $955k. After settling all expenses, I can report our total funds raised since the inception of the tournament is just over $1,050,000.

Will people come back and play? Boy did they. I can say it was one of the best ones. I had a great time with my team but most noticeably I hadn’t heard that sound in 3 years. Coming up the stairs after the event, the buzz in the room. The room was vibrating with stories about the putts they almost made, the ones they did, and how close to the winning score they were.

Will this go on? After the 2022 tournament, I am more content that this will go on. The committee is committed. The players will be play. And the sponsors will sponsor. Thank you all for your time, donations and commitment, it takes a community to pull it off.

Trust In Me. (Communication and Transparency)

A pillar of any relationship, including your clients, is trust. If they don’t trust you, how can they rely on the advice or representation you give them. This trust is earned through your actions. There are three key ways to build and maintain this trust.

Communication. Trust is the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships together. Be respectful of your client. Listen more than you talk. In order to offer them the best possible service understand what their goals are. Once you know what the end game is, you are in a better position to help them achieve these goals. One way to help achieve those goals is to be a problem solver rather than throwing up road blocks. Listen to their concerns and find creative solutions to help your client get that deal they want.

Transparency. A wise person once said, when you make a mistake promptly admit it and correct it. It’s okay to say “I don’t know but let me do my homework and get back to you”. If you are careless with the truth in small matters how can they know to trust you with important matters. Your client will trust you more if you are open to admitting that you may not have all the answers or that you made an error but are taking steps to rectify it. Be accountable when you make a mistake. We’re all human and it will happen. It will build credibility and your client will respect and trust you more if you are honest.

Put your client first. Here is an example of this. Agents can caught up in the commission that will be paid at the end of the deal. When ego gets in the way, trust can be broken. Our job is to put the client’s needs above our own. Don’t be selfish, this is not about you. It’s about getting the desired result for your client. The pay day at the end of a transaction is the icing on the cake. Your client needs to trust that above all, you are looking after their needs.

Building and open, honest and trusting relationship with your client can solidify a long term working relationship. If they trust you, they will come back to you for their next purchase, dispositon or lease. Keep your promises and be consistent. Be the kind of person others can trust.