CWS Q3 2022 Saskatoon Capitalization Report Summary

Over the past 18 months Saskatoon’s commercial real estate investment market experienced capitalization rate (CR) compression in nearly all asset categories. Industrial investment experienced the most significant downward pressure in capitalization rates moving from an average of 7.16% in 2020 to an average of 6.43% by Q2 2022. In contrast, office investment has experienced a rise in capitalization rates with office buildings trading at an average of 6.23% in 2020 to 7.18% by Q2 2022. Office buildings in Saskatoon are experiencing some instability due to high vacancy, which was caused by growth of the market and a general flight to quality. All other major investment categories in Saskatoon are experiencing historically low vacancy rates (below 5%) and their declining capitalization rates reflects the strong performance within the Saskatoon market.