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Overview | Saskatoon | Prince Albert | Lloydminster | Yorkton | Battlefords Market Overview | Offices | Apartments | 8th St & Broadway   8th Street East & Broadway Avenue Commercial Market Survey 2004 The 8th Street commercial strip has seen major changes in the last few years. Two 8th Street auto dealerships relocated to the Auto Mall, with another dealership leaving 8th Street for a Circle Drive location. Rawlco Radio constructed a new building by the river and a new RCMP building was recently completed in the Auto Mall. These moves opened up several large parcels of 8th Street land for redevelopment. Construction and leasing is complete on Varsity Common, a new project on the former Jubilee Ford site. This development consists of approximately 70,939 sq.ft. of rentable area and is anchored by a Garden Market IGA. Further, construction on the former Sherwood Chev dealership site on 8th Street East is ongoing with London Drugs, Winners and Staples and an East Side Mario's Restaurant. The total rentable area of this development is approximately 98,000 square feet. Probably the most significant retail change in years has been the opening of Preston Crossing on U of S land at the intersection of Preston Avenue and Circle Drive to the north of 8th Street. Phase I of this 600,000 sq.ft. development is complete with Canadian Tire, IGA, Home Outfitters, Shoppers Drug Mart and Future Shop (Best Buy) as some of the tenants. This size of centre will have a major impact on retail development in the city, most notably on 8th Street. Canadian Tire and Future Shop relocated to Preston Crossing from 8th Street. Phase 2 construction is now under way and includes a 110,000 sq.ft. Wal-Mart, an Old Navy, PetsMart and an as-yet unnamed restaurant. Eighth Street East remains the major retail commercial strip in Saskatoon east of the South Saskatchewan River. There is a strong tenant mixture of restaurant, financial, automotive, office and Commercial Retail Units (CRU's) along this strip. Demand for quality commercial space on 8th Street continues to be high with rental rates being some of the highest in Saskatoon. The most recent re-assessment had little affect on property taxes with taxes generally being stable. The outlook for the coming year is very positive but some questions and concerns about new construction, vacancy and absorption remain. 8th Street East This portion of the study surveys commercial properties which front 8th Street East from Broadway Avenue, east to the City Limits. The most intense commercial development on this strip is between McKercher Drive and Broadway Avenue. Eighth Street East has over 2.2 million square feet of total inventory. The most predominant use is The Centre at Circle and Eighth, a 570,000 sq.ft. regional shopping centre, anchored by Zellers, Safeway and Wal-Mart. The information gathered identifies the total inventory as of June 1, 2004, the absorption over the previous year and the vacancies as of June 1, 2003 and June 1, 2004. The overall vacancy is back down to 4.7% from 6.2% last year. Between June 1, 2003 and June 1, 2004, there was 38,844 square foot new space added to the inventory and this does not include the East Side Mano's Restaurant which was under construction. The results are summarized on the following table.
The commercial properties surveyed were divided into retail, office and freestanding facilities. The majority of the space on 8th Street is in multi-tenant facilities, with just over 20% in freestanding buildings. There was a net addition to inventory, over the study period, of approximately 39,000 sq.ft. All of this space is occupied. The net absorption on 8th Street was a positive 69,020 sq.ft. as vacancy decreased and the total occupied space is up over last year. Broadway Avenue This portion consists of commercial properties between 8th Street East and 12th Street East. This area of Broadway Avenue is developed with a number of retail shops, restaurants and craft stores. The retail area along Broadway is one of the older business districts in Saskatoon and is located near the top of the Broadway Bridge, which leads to the central core. This retail area was the first of three Business Improvement Districts (BID) in the city known as On Broadway. Through the use of a special business tax levy, the BID has made significant improvements to the streetscape to make it more pedestrian friendly. These improvements are of a design that is complementary to the original design of the older buildings on the street and included such things as new street signs, improvements to sidewalks and landscaped boulevards with park benches. The Broadway strip is known as a trendy location to do business and a number of restaurants and shops have moved to the location, having a very positive influence on vacancies. The vacancy on Broadway, as of June 1, 2004, was 1.0%, down from 1.3% in June 2003. This figure is based on above-grade commercial space.
The breakdown of office and retail space shows that the area has roughly 92% retail space and 8% offices. Combined Figures The amalgamation of 8th Street East and Broadway Avenue results in a total commercial rental square footage of 2.39 million square feet. The overall vacancy is 105,176 sq.ft. or 4.4%. Rental Rates & Occupancy Costs As would be expected with a low vacancy level, lease rates on 8th Street and Broadway are among the highest in the city. On 8th Street, a typical retail space with average exposure yields $14.00-$16.00/sq.ft. on a net basis. Some of the smaller bays with high exposure have commanded rates even higher. The tenant improvement package varies depending on the length of lease and the covenant associated with the tenant. A typical CRU space on Broadway yields $10.00 to $16.00/sq.ft. on a net basis. An end cap or free standing facility on 8th Street rents in the $20.00-$25.00/sq.ft. net range. Quality, professional office space at either location leases for around $8.00-$12.00/sq.ft. net. Some of the older office structures with less exposure demand $6.00-$8.00/sq.ft. net. Occupancy costs for a typical CRU space are generally in the $6.00-$8.00/sq.ft. range on 8th Street and in the $5.00-$6.00/sq.ft. range on Broadway. These rates have remained relatively stable over the last year. This is for both retail and office spaces. Conclusion The 8th Street location continues to be the strongest retail strip in Saskatoon. Preston Crossing was feared to have a negative impact on the 8th Street strip. Two tenants from 8th Street relocated to Preston Crossing which increased vacancy in 2003. These spaces have since been re-leased and vacancy is under 5% in 2004. Varsity Common and the redevelopment of the former Sherwood Chev site indicate the continued strength of the 8th Street location. Wal-Mart will be opening a large new store in Preston Crossing in early 2005 with no announcement made yet about their current store. Is has been much rumoured that they will exit 8th Street. If this does happen, it is probable that this space will be back-filled. Broadway is a neighbourhood location, not subject to the same influences on 8th Street. Rental rates and occupancy levels continue at high levels, a trend expected to continue for the foreseeable future. Qualifications Readers of this Study are welcome to use the information as deemed appropriate, providing Brunsdon Junor Johnson Appraisals is quoted as the reference source. We are a real estate appraisal firm providing a wide range of appraisal and consulting services, with the primary market being the north central portion of the Province of Saskatchewan. Special recognition and thanks is paid to all the building owners, property managers, real estate agents and City officials who assisted with information upon which this report is based. Without their support this study would not be possible. Updated January 4th, 2006 by Ron Smail
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