Q1 2021 Saskatoon Retail Overview
Updated: Apr 27, 2021
The retail sector was once the city’s most competitive sector. Now, due to the impact of the pandemic, the city’s retail sector is likely to undergo a significant transition. As the fall out of the pandemic has yet to fully impact the sector, it is anticipated that the coming year will yield trying times for retailers which will result in many business closures leading to a significant increase in vacancy.
Throughout the past few years, the city’s retail sector experienced substantial growth. As a result of emerging neighbourhoods in Stonebridge, Kensington, Blairmore, Rosewood, and Evergreen, retail growth within these neighbourhoods followed suit. Once prominent corridors, such as Broadway, Circle Drive, and 8th Street, experienced a softening in demand as the focus of retail began to shift as tenants explored suburban options within growing neighbourhoods. This demand fueled a robust growth cycle for the city’s retail sector with notable developments such as Brighton’s Marketplace, Cory Commons in Stonebridge, Meadows Marketplace in Rosewood, and Evergreen Crossing.
Before last year, much of the newly introduced inventory was pre-leased and met with high demand, however, the past year saw a significant decline in demand leaving a substantial portion of new inventory to commence construction without securing a tenant. Furthermore, as a result of the pandemic, which is expected to have long-lasting effects on the retail sector, many retailers began to pivot their business models to stay afloat altering the physical retail requirements of many retailers. As the pandemic restrictions endure and government funding programs run their course, a sizable number of retailers will have to face the harsh reality of closure. With local, national, and international businesses all being impacted by the pandemic, it is likely that vacancy, which currently hovers around 5.5 - 6 percent, may experience a significant uptick when the dust settles.
With a daunting increase in vacancy looming, landlords are being initiative-taking with their tenants. Landlords with quality tenants are looking to collaborate with these retailers to help retain them long-term; while landlords with existing vacancies have started to show a willingness to negotiate and accommodate tenants with competitive inducements. Overall, face rates are projected to hold relatively firm and not show much of a decline in the coming year and will continue to hover around $20 per square foot; average asking rates for new developments are calculated to range in the mid-to-high twenties, while average asking rates for existing developments range in the mid-teens to low twenties. Looking at the coming year, it is projected that net rates, particularly in existing corridors as opposed to new developments in emerging neighbourhoods, will experience downward pressure as a result of competitive inducements offered by landlords.
Once the city’s most competitive sector, now faces the most turbulent times ahead. The longer the pandemic endures the greater the adverse effects that will plague the sector causing long-term ripples to how retailers operate; particularly influencing retailers' footprint and requirements for brick-and-mortar locations.
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: email@example.com Download digital business card here.