Avison Young released its 2012 Year-in-Review/2013 Regina Market Forecast last week, predicting positive trends for the Regina commercial real estate market.
Strong performance across all asset classes, additional Class A office space and industrial land, lack of investment product, and healthy retail sales characterize the strong performance foreseen for Canada’s 24th largest city, where landlords clearly have the upper hand.
“The provincial and regional economies have witnessed a couple of small bumps in the road but, by and large, they continue to trend in a positive direction and in a sustainable manner,” says Richard Jankowski, managing director of Avison Young’s Regina office. “There has been sustained growth in the manufacturing sector, expansion and diversification in the resource sector, and a resurgence in agriculture. All of this activity had a positive impact on the commercial real estate industry throughout 2012, and we expect this growth to continue in 2013 and beyond.”
Jankowski adds the continued growth in investor and business interest in the province is what led his office to publish its first-ever all-encompassing market report.
“It is great to see a new office tower go up in our downtown, the first in 20 years,” says Avison Young principal, Dale Griesser. “As a result, the office market gained some breathing space during the past year; however, Regina remained the national leader in terms of low vacancy rates. Of equal significance is the current growth in the fringe and suburban areas as new and existing tenants look for space to fit their business needs.”
Griesser adds, “The office construction planned and underway is at the highest pace for adding inventory in recent memory, and long overdue to satisfy overheated demand.”
The city’s industrial market has also been very active in both building construction and land development. According to Avison Young sales associate, Jeff Sackville, who specializes in industrial sales and leasing, the market is expected to stabilize in 2013 after a strong performance in 2012.
“Lease rates have flattened out now that the market correction has moved through this sector. It has been good to see the City of Regina develop new industrial land and, despite the lift in the purchase price, demand is strong as new businesses locate to the area,” says Sackville. “We’d like to see that happen outside the city as well, where interest for larger-scale developments has been evident. It is good to have balanced options.”
The retail sector is considered a turbulent market in transition, according to Avison Young sales associate, Joe Trudelle, who specializes in retail and office sales and leasing.
“On the one hand, it is very exciting to see our city gain the attention of U.S.-based retailers who now want to come here,” says Trudelle. “On the other, we’ve seen a generally significant lift in lease rates on renewals, which has put pressure on tenants and the landlord-tenant relationship.”
The multi-residential market is consistent with other asset classes.
“We’re seeing growth, we’re seeing lots of new inventory,” says Avison Young sales associate, Art Ingleby. “In fact, residential development helped lift the Regina to record-breaking building permits in both dollar value and the number of transactions in 2012. But the reality is, there just doesn’t seem to be an end in sight to the tight market conditions.”
Ingleby says highrise condominium towers under construction, plus distributed clusters of apartment and condo buildings, have been a welcome sight in the city.
“However, there has to be land developed to support future construction,” he adds. “And then hopefully there will be a balance of price points to enable all consumer groups to acquire properties.”
