A recent report says that two new office towers in Saskatoon will have a trickle-down effect on commercial real estate in the city.
The report, from CBRE Research, said the River Landing properties are the first true Class A office spaces in downtown Saskatoon since the 1980s.
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Both towers, which are currently being built, have a total of 450,000 square feet and have already achieved pre-leasing of over 60 per cent. They are slated to open in late 2019 and early 2021.
With limited new tenants in Saskatoon, this means that companies in lesser real estate may upgrade their spaces and, in turn, have significant trickle-down impacts on second-tier office properties in the market, according to CBRE.
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The report said the construction of these two new office towers likely means higher vacancy rates in the short-term as tenants take advantage of opportunities to move up the chain and sign leases in higher-quality buildings at moderate rental rates.
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The report also added the Saskatoon industrial landscape continued to improve in 2018 following several years of excess supply and high vacancy rates triggered by a wave of construction that ended in 2013.
According to CBRE’s 2019 Canadian Real Estate Market Outlook, the city’s industrial vacancy rate sits at a healthy 7.7 per cent, with rents remaining resilient at $9.25 per square foot.