For the news consumer, industrial real estate may not be the sexiest topic.
Real eState
Joanne Paulson: Saskatoon’s industrial real estate in hot demand, short supply
Most of us think about where we’re going to live, shop and eat out, not what a company is manufacturing across town. But industrial space, and how it’s faring, is incredibly important. As Brent Haas put it simply and bluntly, “Industrial drives the city, the community.”
Manufacturing drives economies and jobs — so yes, it’s important.
I called Haas, a broker with RE/MAX Bridge City, for some perspective on local industrial real estate after RE/MAX Canada put out its quarterly report recently.
I was aware that it was tough to purchase industrial buildings in Saskatoon, but the report surprised me a little just the same.
“Industrial is extremely tight, with any space coming to market immediately scooped up,” the report said.
But the lack of supply is strangling activity and forcing companies to buy old buildings, which they either rehabilitate or tear down preparatory to rebuilding.
(In a brief digression related to the above, I liked this line in the report: “While Toronto is well-known for its crane count, Saskatoon is now home to the backhoe.” Ha.)
How tight is this market?
“There’s a lineup of buyers,” Haas said. “If I had 10 industrial buildings right now, tenants in place, I could sell 10.
“You list it and you will sell it instantly, if it’s priced well.”
Yikes. How did we get here?
Going into 2019, there was “a lot of opportunity to get into a (leased) space from $7 to $9 a square foot, into brand new space with tenant incentives,” he said.
Then came the pandemic.
“After COVID, we were going into this boom all of a sudden and now we’ve seen rates jump up … to $12, $15, $16, $18 per square foot for that kind of building.” In other words, doubling, in many cases.
Those rates don’t apply to some of the space in older industrial areas of the city, he noted. Getting into a new building is easier because improvement costs are high, which has resulted in the 71st Street area filling up quickly.
However, the situation is tight enough that things may start to shift on the infill side. For example, Haas points to the old Imperial 400 motel site on Idylwyld Drive, in his opinion the most valuable land on that strip. It hasn’t sold in the past, simply because of the old building sitting on the property.
Now, it won’t take long for it to sell, “even with the motel having to be removed,” he said. “New land is far more expensive than it is to demise that structure.”
Despite all this demand, though, little industrial space is being built. So, I wondered, if matters are this dire, why are we not seeing builders scrambling to meet demand?
And that is partly based on bad memories, he said.
“They were stuck holding hundreds of thousands of square feet in 2016.”
Saskatoon is also competing with Regina, which has far better infrastructure, including roads, for the industrial sector. Also, the mentality here is less aggressive than, for example, in Alberta, in Haas’s view.
Yet despite these issues, he thinks the industrial market will continue to be fairly hot for some time.
“But the smaller industrial warehouses for your electrician or plumber will always be in demand. These industrial complexes for your countertop people and supporters of residential building, that’s always there. That grows, that shifts.
“So I think industrial is going to continue to grow. It’s just going to grow (on) a slower scale.”
Joanne Paulson is a Saskatoon author and freelance journalist who has been covering real estate, off and on, for more than 25 years. Do you have a fascinating real estate story to share? Get in touch at jcpwriter@sasktel.net.
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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
The Canadian Press. All rights reserved.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
The Canadian Press. All rights reserved.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
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