LEDUC NISKU UPDATE - APRIL 2020
Jim McKinnon
Partner - AICRE - ?? 780.719.8183 - AICRE COMMERCIAL REAL ESTATE - ?? [email protected]
QUARTERLY SANDWICH: January was slow, February started off busy, activity solid and looked like we were heading in the right direction, only for COVID and OIL issues to come along and slow things down in March. It seems an eternity ago that TECK Resources withdrew their application of the Frontier Mine project (it was February 23, 2020).
CAPITAL PRESERVATION NOW BUSINESS PRESERVATION: We expect most businesses to ask for some type of rent deferral. Businesses (especially Oil/Gas) were desperate to preserve capital over the past couple of years, most notably for us in relation to office build outs and increased amenities in warehouses and shops. Tenant’s had been looking for Landlord’s to build out offices, add in cranes / air make up units etc. and have the value of these improvements added to their total lease amount (and amortized over the lease term).
Rent Deferral DOES NOT EQUAL Free Rent, it will have to be paid back. Expect Tenant Inducements for new Tenant’s (Free Rent and Tenant Improvement allowance) to become even more aggressive than before, but expect Landlord’s to be more diligent in their approval of new Tenant’s and will want to have a solid understanding of their Tenant’s business.
MARKET NOTES:
- Vacancy flat around 5%-6%, but expected to rise in the coming months. Increase in sublease space likely, but will depend on what arrangements Tenant’s and Landlord’s are able to agree to.
- On a positive note, there have been one or two sectors of the market that seem to be doing OK (Health+Safety), and we had an increase in interest in small bay Multi-Tenant facilities through Feb/March.
- Rental rates continue to push down towards $12.00 SF (a few dollars either way depending on site coverage, building quality, length of lease term, Tenant inducements).
- Small bays around $10.00 – $12.00 SF.
- Good quality 10,000 SF free standing buildings in the $13.00 - $15.00 SF range.
- Few inquiries on land (both Lease / Sale): 60 - 75c SF lease rate.
Feel free to contact me on 780.719.8183 or [email protected]
