Saskatoon's Industrial Real Estate Market Trends: Q3 2024 Overview

Saskatoon's industrial market continues to show signs of strength and resilience, even amid slight shifts in vacancy rates and a push for new construction. As a commercial real estate broker, staying on top of these trends allows us to anticipate market moves, better serve clients, and maintain a proactive approach in managing properties. Here's a snapshot of the key insights from the Q3 2024 ICR Industrial Report.

Rising Vacancy Rates – A Shift in Saskatoon’s Industrial Market?

The report highlights a 2.73% vacancy rate in Saskatoons industrial market for Q3 2024, up from 2.04% in the previous quarter. While this marks a slight increase, Saskatoons industrial market remains competitive. Several large spaces have re-entered the market, including: 106 Tubby Crescent with 31,500 SF 2401 Millar Avenue with 44,307 SF 2607 Wentz Avenue with 28,636 SF This shift is driven primarily by negative absorption totalling 146,333 SF. For context, negative absorption occurs when more space becomes available than is leased or absorbed. Though vacancy has risen, the current 2.73% rate suggests demand is still robust.

Question for Readers:

Are you currently looking for industrial space? Share your insights on factors driving your space requirements in today’s market!

Industrial Lease Rates See a Modest Increase

With tight inventory, lease rates in Saskatoon’s industrial sector have increased. The average asking rate rose to $13.26 per square foot (PSF) this quarter, a minor increase from $13.19 PSF in Q2 2024. Higher lease rates are a common trend in competitive markets, and we’re seeing this pattern hold here despite a bump in vacancy.

Saskatoon's Demand Drives New Construction

Last year, developers exercised caution, slowing new builds and waiting for clear signals of sustained demand. However, 2024 has seen a surge in construction to meet the city's demand backlog. Over 200,000 SF of new industrial space is expected to enter the Saskatoon market between late 2024 and early 2025. This rise in inventory could push vacancy rates even higher to approximately 3.5%, but demand is expected to continue favouring landlords. New developments offer updated features, a draw for tenants eager to expand or improve their facilities.

For those considering new space, are modern amenities and updated facilities a top priority for your business? Comment below if your team values modern features over price.

Regional Industrial Market Breakdown

To offer a granular view, here’s how various Saskatoon neighborhoods performed in Q3 2024:

1. Agriplace: Lowest vacancy at 0.22% with 3,000 SF vacant.
2. Airport: 2.12% vacancy with a drop in absorption of 17,653 SF.
3. Marquis: 1.64% vacancy and 101,307 SF of vacant space, boasting some of the highest lease rates at $14.50 PSF.
4. Southwest: 3.41% vacancy, with the average asking rate of $11.53 PSF.

The North, with its highest vacancy at 3.91% and substantial negative absorption of 143,753 SF, remains a significant area to monitor for both prospective tenants and landlords alike. This high vacancy rate can offer potential opportunities for businesses seeking competitive lease rates in high-traffic areas.

Key Takeaways for Tenants and Investors

As Saskatoon’s industrial market prepares for additional inventory, both investors and tenants have important factors to consider:

For Tenants: With new space entering the market, there’s an opportunity to secure leases with favourable terms as competition for tenants might rise.

For Investors: Monitoring vacancy and rental rate trends will be essential to determining whether investment returns align with current market demands.

Final Thoughts: What’s Next for Saskatoon’s Industrial Market?

As we head into 2025 and beyond, the slight rise in vacancy and ongoing construction of new spaces signal an exciting time for Saskatoon’s industrial sector. The fundamentals remain strong, with healthy demand supporting the market. It’s an ideal time for businesses to assess their space needs, capitalize on potential new leases, or expand in emerging areas.

Interested in Learning More? Connect with Us!

If you’re exploring industrial real estate options in Saskatoon, whether for leasing, buying, or investment, reach out. Let’s talk about how these trends might shape your next real estate decision!