Eighth Street East is 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) along this strip. The tenancies have been stable over the year with few major shifts. Demand for quality commercial space on 8th Street continues to be high with rental rates being some of the highest in Saskatoon.

The issue of re-assessment and increasing property taxes has had less affect than first expected. The increase in 1999 was the last of the three-year phase-in program. The increased expenses did not lead to major increases of vacancy and this last year has seen some increase in net rental rates. The outlook for the coming year is very positive.

Two automotive dealerships will potentially be vacating 8^th Street to relocate onto Circle Drive at the southern edge of the city. These moves would result in two large re-development sites. It is likely that this re-development could occur within the next two years.

EIGHTH STREET EAST

Survey Parameters

The 8^th Street portion of the study surveys commercial properties which front 8^th Street East from Broadway Avenue, east to the City Limits. The most intense commercial development on this strip is between Moss Avenue and Broadway Avenue.

Eighth Street East has over 2.1 million sq.ft. of total inventory. The most predominant use is The Centre at Circle and Eighth regional shopping centre, anchored by Zellers, Canadian Tire and Wal-Mart.

The information gathered indicates the total inventory as of June 1, 2000, the absorption over the previous year and the vacancies as of June 1, 1999 and June 1, 2000.

Results

The overall vacancy is up marginally from 2.68% to 3.10%. The vacancies continue to be in CRU spaces either retail or office in nature. The results are summarized on the following table.

Between June 1, 1999 and June 1, 2000, 70,217 sq.ft. was added to the inventory, with 1,475 sq.ft. removed. The net result is a increase in inventory of 68,742 sq.ft. The total inventory, as of June 1, 2000, is approximately 2.15 million sq.ft.

The commercial properties surveyed were divided into retail, office and freestanding facilities. This breakdown is illustrated on the following table.

Approximately 75% of the space on 8^th Street is in multi-tenant facilities, with just under 25% in freestanding buildings. The total vacancy of 66,676 sq. ft. (3.1%) is all in multi-tenant facilities.

Absorption

There was a net addition to inventory, over the past year of approximately 69,000 sq.ft. Net new absorption on 8^th Street was approximately 58,000 sq.ft.


BROADWAY AVENUE

Survey Parameters

The Broadway Avenue portion consists of commercial properties between 8^th Street East and 12^th Street East. This area of Broadway Avenue is developed with a number of retail shops, restaurants and craft stores.

The retail area along Broadway Avenue's commercial strip is one of the older business districts in the city of 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. 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, 2000, was 2.7%, down from 4.3% in June 1999. This figure is based on above-grade commercial space. The results are summarized in the following table.

The commercial properties surveyed were divided into office and retail. This breakdown is illustrated on the following table.

Table #4 indicates that the majority of development on Broadway is retail in nature.

COMBINED FIGURES

Total Areas

The amalgamation of 8^th Street East and Broadway Avenue results in a total commercial rental square footage of 2.34 million sq.ft. The vacancy is 71,604 sq.ft. or approximately 3.1%.

Rental Rates & Occupancy Costs

As would be expected with a low vacancy level, lease rates on 8^th Street and Broadway are among the highest in the city. A typical retail space with good exposure yields $12.00-$14.00/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 good corner or free standing facility rents in the $18.00-$25.00/sq.ft. net range. Quality, professional office space leases for around $10.00-$12.00/sq.ft. net. Some of the older office structures or spaces 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 8^th Street and in the $4.00-$5.00/sq.ft. range on Broadway. These rates have remained relatively stable over the last year. This is for for both retail and office spaces.

Conclusion

The 8^th Street, Broadway location continues to be the strongest strip retail location in Saskatoon. The low vacancy and high demand is expected to continue for the foreseeable future. The strong market is leading to increased rental rates on some leases. If the tax rates continue to rise and the economy cools, there could be some trickle down effect.

QUALIFICATIONS

Readers of this Study are welcome to use the information as deemed appropriate, providing Brunsdon, Martin & Associates Ltd. is quoted as the reference source. Brunsdon, Martin & Associates Ltd. is 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.