After a decade of declining vacancies in office buildings, Saskatoon’s downtown office vacancy increased by 50,000 square feet in Q2. This jump resulted in a 14.8-per-cent office vacancy rate, or 365,000 square feet of unoccupied space, according to Colliers’ new Saskatoon Office Market Report.
“We began to see a rise in vacancy last year and unfortunately for our downtown, this trend has continued into 2015,” said Tom McClocklin, president and managing director of Colliers in Saskatchewan, in a press release. “However, it is important to remember that given the small overall size of the market, a single tenant leaving can have a significant impact on our vacancy number. So while some small firms have left, our key downtown tenants are still committed to large amounts of space.
According to Colliers, this increase in office vacancy is not unusual when compared to other areas, such as Regina, Calgary and Edmonton, where vacancy has increased over the same period last year. Colliers believes the office market will fluctuate with the strength of Saskatoon’s industries, which are heavily represented by the mining and resource sector.
In downtown Saskatoon, several mining and resource firms have vacated office space, creating a large amount of sublease inventory available. Meanwhile, in the suburban market, inventory and large buildings with tenants that vacate in favour of newer space create higher than normal vacancy.
The suburban office market has grown over the past five years, with the addition of 70,000 square feet of new inventory so far this year, and an anticipated additional 70,000 square feet of space by the end of 2015. This will likely cause the current 13.49-per-cent vacancy rate to increase in the short term.
The market seems to have stabilized with the current vacancy rates. As more suburban space becomes available and Saskatoon’s resource sector takes time to recover, it may be another decade before the city sees vacancy rates decline.