Downtown rental rates are expected to soften in the coming year with an abundant supply of vacant office space and little demand for that space, according to a Colliers International report.
In its 2019 Q4 report on Saskatoon's office market, Colliers noted significant growth in Saskatoon's downtown, coupled with a "relatively flat demand" for downtown office space.
The year-over-year vacancy rate rose to 15.1 per cent, about 3.2 million square feet across 73 buildings, up from 11.1 per cent in 2018. About 280,000 square feet is under construction.
In the city's suburban office space, Colliers found 2.9 million square feet of vacant office space, about 11.2 per cent of the supply, across 106 buildings.
"Saskatoon is experiencing the effects of a building boom of premium office product," said Richard Jankowski, managing director of Colliers International in Saskatchewan, in a news release.
"The first tower at River Landing is complete and its presence is already being felt in the market."
Jankowski added Colliers is looking forward to see the direction downtown Saskatoon will take in the future as supply and demand evolves.
The current imbalance is driving downtown office space rentals down, according to Colliers. The current rental rate for downtown Saskatoon sits at $19.94 per square foot while the suburban average is calculated at $18.35 per square foot.
Colliers predicts the market will continue to "soften" in 2020 and that landlords will continue to be aggressive in attracting tenants in order to remain competitive.