• Alvi Campos - Commercial Real Estate

Q1 2021 Saskatoon Office Overview

Updated: Apr 27, 2021

Saskatoon’s office market experienced a significant increase in vacancy due to tenants repositioning within the competitive downtown office sector starting in the latter portion of 2019. The initial wave of repositioning occurred as tenants migrated to the East Tower at River Landing, the second wave is expected to continue with the subsequent phase, the Nutrien Tower, slated for completion this year.

The city’s office market has seen a continual increase in office vacancy that started in 2013 due to a soft economy that resulted in many cyclical office users, such as Cameco, needing to shed unnecessary office space. In the following years, vacancy would continue to rise into the mid-teens as modest demand for space endured throughout this period. Signs of stability started to surface at the end of 2017, however, this stability was short-lived due to the announced introduction of AAA office space at River Landing.

Significant demand for prime office space fueled the development of River Landing as tenants from existing developments within downtown migrated to the new space. Royal Bank Dominion Securities, MLT Aitkins, and Ernst and Young were the first tenants announced at the East Tower, along with Nutrien who will occupy much of the space in the second phase of the development.

City-wide vacancy is calculated at 16.1% as of March 31st, 2021. Competitive downtown vacancy currently sits in the mid-to-high teens and is projected to escalate to the mid-twenties upon completion of the Nutrien tower. Vacancy may escalate even higher once the full effect of the pandemic is felt throughout the office sector. Unlike other markets throughout the country, Saskatoon has not yet experienced a notable increase in sublease space because of the pandemic. Nevertheless, this may change in the coming months depending on the duration of the pandemic and the effects that it will have on the space requirements of office users within the city.

The city’s office market faces challenging times ahead. Vacancy will inevitably rise due to the expected relocation of tenants, but how high vacancy will escalate is still to be determined until the full aftermath of the pandemic has impacted the sector. Landlords are anticipated to become even more competitive in their inducement offerings as they try to attract potential tenants, yet it is anticipated that many tenants will explore short-term leases as they continue to postpone real estate decisions until more clarity regarding the duration of the pandemic restrictions are known. The initial roll-out of a vaccine provided hope for the sector, yet vaccine delays, coupled with variant outbreaks, have dampened this hope as these delays continue to prolong a return to normal for office users. What was once considered a normal office environment may never be what it once was, as many companies are anticipated to not only alter their office layouts but also provide a flexible work environment to adjust to the changing employee demands. Some of these changes will yield a reduced physical footprint for some office users, while some may need additional space in order to accommodate the health concerns of employees. To learn more regarding the state of the different sectors of the Saskatoon commercial real estate market, don't hesitate to contact me today to learn more. Contact information:

C: (306) 716-2774

E: alvi.campos@century21.ca Download digital business card here.

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