Saskatoon’s downtown office vacancy rate might see a sustained upward trend over the next few years, despite the construction of a high-end riverside tower designed to attract choice clientele, according to ICR Commercial.
A major factor working in the market is the fact that there’s just not enough new blood.
“The demand for new Class A inventory is coming from users already present,” ICR Commercial managing partner Barry Stuart explained, as quoted by CBC News. “There are not enough new tenants entering the market and the flight to quality is projected to continue.”
In its latest analysis, ICR said that this would mark the latest in the path set almost two years ago, when the area’s vacancy rate stood at 15.6%. Currently, it sits at 16.7%, translating to more than 400,000 square feet of unoccupied downtown office space.
However, the current rate has yet to include the 120,000 sq. ft. in the River Landing North Tower, which is still in the earliest stages of construction.
“Once that additional vacancy is accounted for, we will be reporting core area vacancy in excess of 20%,” Stuart noted.
Excess supply is a similar problem that Toronto and Vancouver will likely encounter in the near future, according to CoStar Group Inc.
Office vacancy levels in the two markets are predicted to double to approximately 6% each by 2023, with the completion of as many as 25 new office or mixed-use buildings in downtown Toronto, along with 15 new towers in Vancouver.
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