Q1 2021 Saskatoon Industrial Land Overview
Updated: Apr 27, 2021
Demand for industrial land within the city has continued at a moderate pace. Land sales in recent years have experienced modest volume following a significant spike in activity that began in 2010 and endured until 2015. Over those five years, land prices increased by 66.5 percent, selling at $333,937 per acre in 2010; and then escalating to $555,926 per acre in 2015. During this period, a surge in demand for industrial land fueled the sale of 112 parcels totalling 245.7 acres.
At the start of 2010, industrial land within the city was significantly undervalued compared to other markets. Industrial vacancy hovered between 2 and 3 percent resulting in lease rates being amongst the highest in the country. Coupled with a booming economy, the following years would see Saskatoon’s industrial market undergo a significant growth cycle as many developers viewed the city’s industrial sector as a sound investment.
However, because of changing economic times and over-development, the city’s industrial vacancy nearly tripled as the market became inundated with vacant speculative developments. During this period, some experts believed that the market was overbuilt by 500,000 to 600,000 square feet of excess inventory. Therefore, since 2015, speculative development has been restrained resulting in a softened demand for industrial land. Due to this cautious mindset, since 2015, only 45 parcels totalling 84.4 acres of land have sold with average sale prices witnessing a decrease of 3.3 percent to $537,248 per acre.
In 2020, 13.4 acres of industrial land sold; this volume kept pace with the 13.5 acres that sold in the previous year. Additionally, two long-term land leases were completed with the City of Saskatoon at 115 Barnes Avenue and 911 71st Street. Throughout the early portion of this year, 1.63 acres of land have sold at an average price of $478,527 per acre and the City of Saskatoon has leased 1.27 acres at 323 60th Street East for $668,000 per acre.
Despite a competitive industrial market, speculative development of new inventory continues to be restrained which has limited the demand for land. As a result, much of the absorption anticipated to occur in the coming year will once again be driven by owner-users. Due to the softened demand for land, land prices will likely continue to experience a moderate decrease in the coming year.
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