I’ve never professed to be a psychic, but I think looking over the trends of the past year I can safely make a few bets on the commercial real estate market for Saskatoon in 2020.
The first is that office shuffles will continue as new construction continues to be absorbed, but creates vacancy in its aftermath.
The 13-storey, 155,356-square-foot East Tower at River Landing is ready for tenant improvements. In fact, at least one tenant is already open for business.
The construction schedule has sped up on the 18-storey, 261,078-square-foot Nutrien Tower and is now on target to be ready in 2021.
Not new, but definitely reborn, the River Quarry on 4th has 64,020 square feet ready for occupancy. This transformed building has seen a massive renovation on the inside (mechanically and aesthetically) in addition to an exterior facelift.
With a flight to quality, these buildings are expected to entice tenants away from older, existing downtown towers.
The downside for landlords is that the pace of new tenants coming into the market to fill that vacancy may continue to be slower as we head into the new year.
Stable Saskatoon industrial
Saskatoon’s industrial vacancy continued to trend down in 2019. As a blue-collar town, I would expect a healthy pace of absorption in 2020 as well.
Tenant requirements are getting very specific with implementation of new technology, so many existing properties will not meet their needs in the near future.
There has certainly been more of a requirement for custom-built facilities to suit tenants.
Speculative building has begun catering to these more modern necessities as well, and while it has definitely slowed over the past two years these properties continue to fill up.
There will be inevitable softening in rates for older, less functional properties as they near the end of their useful lives.
Shopping for deals
Even with a slight increase in vacancy, the retail market in Saskatoon should stay strong into 2020. Most of the vacancy is due to new construction in the expanding suburban neighbourhoods and on 8th Street.
Under-retailed for so long, the Saskatoon market needed this type of product but the national economic slowdown has been felt locally.
A surprising area of healthy occupancy does seem to exist in our enclosed malls, which bucks the trend nationally.
The Midtown Plaza has spent considerable investment over the past year renovating the vacated Sears space and it appears to be paying off with new tenants as well as the expansion of others.
If you tried to get into a mall parking lot during December, you’d definitely agree they seem like healthy centres at best.
It’s harder to recognize small gains when we’ve enjoyed a few years of unheard-of growth provincially.
That said, all signs point to slow but steady economic increase in 2020 which tends to reflect favourably in retail sales especially.
I would love to hear if you share or, even more so, don’t share my outlook!
Canada real estate: TD Economics sees high home prices holding up in fourth quarter before dropping in 2021 – The Georgia Straight
Home buyers looking for a bit of a discount may want to wait a little.
A housing report by TD Economics predicts that high home prices will persist for the rest of 2021.
“Regarding prices, we think they’ll hold up at these record levels in the fourth quarter…,” economist Rishi Sondhi wrote.
Then things will start to ease in 2021.
Sondhi explained that tight supply is driving high home prices.
According to the TD Bank economist, the real-estate market is currently in seller’s territory.
The economist noted that the national sales-to-new listings ratio in September “registered a drum-tight reading” of 77.2 percent.
He noted that “markets were the tightest they’ve been in nearly 20 years in September”.
Sales-to-new listings ratio is the number of sales divided by listings.
A seller’s market means that the sales-to-listing ratio is 60 percent or more, or six sales out of 10 listings.
A balanced market features a ratio between 40 percent and 60 percent.
A buyer’s market happens when the ratio is less than 40 percent, which means fewer than four sales for 10 listings.
In a report on October 15, the Canadian Real Estate Association noted that the national average price of a home set a new record in September.
The average price topped the $600,000 mark for the first time at more than $604,000.
In his report on October 15, Sondhi predicted “some easing is anticipated” for prices after the fourth quarter of 2020.
This is consistent with Sondhi’s previous report on October 8.
The bank economist noted in that earlier report that “unlike sales, an immediate fourth quarter pullback is unlikely” for prices.
“In fact, another (modest) gain could be in the cards,” Sondhi wrote.
“After the fourth quarter,” Sondhi predicted on October 8, “Canadian prices will likely drop through the first half of 2021 by around 7%, before regaining some traction later next year.”
Brookfield weighs US$3B life-sciences real estate portfolio sale – BNN
Brookfield Asset Management Inc. is exploring a sale of its life-sciences real estate portfolio, and seeking about US$3 billion, according to people with knowledge of the matter.
The Toronto-based alternative asset manager is working with advisers to sell roughly 2.3 million square feet of life-sciences real estate it acquired as part of its 2018 purchase of Forest City Realty Trust Inc., said the people, who requested anonymity because the information isn’t public.
A Brookfield representative declined to comment.
Blackstone Group Inc. agreed last week to recapitalize a portfolio of BioMed Realty life-sciences buildings for US$14.6 billion, a deal that will generate US$6.5 billion of cumulative profits four years after investing in the properties.
Life sciences, which includes pharmaceutical, biotech and other medical research fields, is a sector where most staff can’t work remotely. That has stabilized the value of such properties.
Alexandria Real Estate Equities Inc., one of the largest real estate investment trusts that owns on life sciences properties, has fallen 2 per cent this year compared to a 14.6 per cent decline of the Bloomberg U.S. REITs Index.
ULI & PwC to Release ‘Emerging Trends in Real Estate’ Report
An upcoming report on Canada’s real estate market will highlight our nation’s resiliency through the COVID-19 pandemic. Nationwide impacts to retail, office spaces, and suburbanization have been felt hard in the development industry, as landowners, sellers, and buyers are all affected by the trials of 2020. Many in the industry are viewing this as a prime opportunity to reposition their portfolios, so this is among the topics to be covered in PwC and ULI’s new Emerging Trends in Real Estate report.
“The coming year will be all about embracing opportunities to be resilient in the face of uncertainty, while shifting strategies in anticipation of market headwinds,” reads a statement issued by Frank Magliocco, National Real Estate Leader, PwC Canada. “For the first time in a few years, we’re hearing divergent views from industry players about issues like the future of office spaces and the urbanization and suburbanization trends.”
Downtown Toronto, image by Forum contributor Michael62
Set to be released on October 30th, the report’s 2021 edition touches on trends and outlooks in the Canadian and US real estate markets. Among these are specific changes to the market, including breakdowns of specific submarkets. Within the commercial real estate submarket, this includes details on retail troubles, office space uncertainty, and warehousing gains. Within the residential real estate submarket, the report discusses the concept of “creating 18-hour cities across Canada,” environments that combine live, work and play elements, as more Canadians are drawn towards more spread out suburban communities.
“The tension between longer term trends and fundamentals and short-term realities manifests in this year’s must-read report,” reads a statement from Richard Joy, Executive Director of Urban Land Institute Toronto. Prudence, “in the face of uncertainty, while dampening some sectors and trends, is accelerating and expanding others.”
The report is to be launched at the end of the month with an online webinar event led with a keynote delivered by Andrew Warren, Director of Real Estate Research at PwC, which is set to be followed by a panel of local experts panel to be moderated by PwC. The program has been expanded, with this year’s event offering attendees the opportunity to participate in various sessions, including a closing Fireside Chat with Jon Love and Aliyah Mohamed to further explore the economic landscape of the real estate development sector.
Those wishing to attend the ULI/PwC Annual Trends in Real Estate webinar on Friday October 30th, from 8 AM to 12 PM, can register at this link.
Source: – Urban Toronto
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