Murray Wood: Who's scary... and who's scary good?
Every Friday, Murray Wood takes a look at the week's news and decides who's hot... and who's not. This week, in a specia...
There is some positive news but the post-pandemic hangover still lingers in the latest office vacancy numbers for Saskatchewan’s two major cities.
Commercial real estate company Colliers released second quarter numbers last week that point to a reduction in vacancy rates year-to-year in Regina, but an increase in Saskatoon that bucked more recent trends.
Regina saw a reduction year-over-year of 12.6 per cent, a reduction of 370 basis points for the quarter. The net absorption rate for the quarter was positive, at 20,000 square feet.
Vacancy rates were down in suburban areas, with a couple of major properties being absorbed — like 580 Henderson Drive and Parkway Place.
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Downtown has also seen a year-over-year trend in a reduction in vacancies, including what is described as a “significant lease renewal” of nearly 30,000 square feet at 2002 11th Avenue.
The Colliers report says this transaction “underscores a renewed interest in downtown properties” despite a quarter-over-quarter increase in overall vacancy rates.
Meanwhile, Saskatoon saw a “notable shift” in Q2, as “absorption turned negative, and the vacancy rate increased across the city.”
Colliers report says the citywide vacancy rate rose 110 basis points year-over-year to 13.7 per cent for the quarter. The net absorption rate posted a negative with 63,000 square feet, a reversal from the positive-33,000 square feet of the previous quarter.
Contributing to the numbers in Saskatoon was the addition of a couple of new properties with office space for purchase or lease.
Both the Saskatoon and Regina reports were positive about efforts towards enhancing the downtown core in both cities. The Saskatoon report pointed to construction starting on the new central library at 321 2nd Avenue North, with the library expected to be completed in 2027.
Positive trends out of Regina
In Regina, Colliers managing director Ryan Babey says the city is doing better for office vacancies than the rest of the country.
Ryan Babey. (Supplied/Colliers)
“Overall in Regina it’s been a tough office market — in all of Canada actually,” Babey said.
“But Regina’s seen some positive stories with vacancy in the decline. We are seeing people returning to work, which is helping the downtown core somewhat. But as a lot of companies sort out their work from home/hybrid policy, it’s still a bit of a wait-and-see to see if our absorption will fully increase to take up some of this vacancy we see in our downtown market.”
Regina is doing better than other parts of the country where long commute times have made it an even bigger struggle to convince people to return to the office, he said.
Babey said parking rates in Regina are also not quite as bad, making it easier for workers to transition back to core locations.
“Overall, Regina … has experienced probably one of the healthiest return-to-work downtowns in the country.”
There has been a lot of talk in Regina about attracting people downtown and the need for revitalization efforts.
Babey said for a vibrant downtown you need people, and when they don’t return to the office “it’s tough to have the restaurants and retail businesses succeed, which is really the backbone to a vibrant downtown.”
He said Regina has seen some regrowth back into the downtown but “we’d like to see a little bit more in order to continue that vibrancy.” One thing that would help, he said, is if construction costs could come down to allow companies to relocate downtown.
The suburban market in Regina has been stronger, and one factor Babey points to is “parking — lots of it.” He said it can be challenging downtown to provide employees with enough parking space.
“That’s not a challenge with a suburban office.”
Saskatoon: more of the same
In Saskatoon, Colliers managing director Richard Jankowski said the story is more of the same from what they’ve seen the last couple of years.
Richard Jankowski. (Supplied/Colliers)
“Less of a story on major projects, more of a story on an extension of putting a lot of space on the market, and the impact of the (Covid-19) pandemic, as much as we’re all tired of talking about it,” said Jankowski.
He said there is “still an extended recovery” from the working-from-home. “I think it’s still going to be a year or two years before we know what the effect of that is.”
Jankowski noted there was stability in both the downtown and strength in the suburban market in Saskatoon. As for the future, he points to “good news over the long haul” for Saskatoon’s market.
Jankowski says that good news includes a robust economy, the City of Saskatoon moving forward with the downtown library project and entertainment district, as well as some movement with a bus rapid transit initiative.
He believes businesses already located downtown will be encouraged to stick around.
“There’s definitely a lot of change that will continue to happen, and we think it’s going to create a impetus or incentive for business to stay downtown, to be connected to what the future will look like.”
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