Red Deer’s industrial building market is “very healthy,” according to the findings of a recent study.
Soderquist Appraisals Ltd. has calculated the local vacancy rate for industrial buildings at 3.57 per cent. Mike Garcelon, the company’s senior appraiser, said he was “pleasantly surprised” by the figure — considering the rate was estimated at eight to nine per cent during the depths of the recent economic downturn.
“We were kind of predicting around here the vacancy might be five, six per cent — somewhere around there.
“A 3.57 per cent industrial vacancy rate suggests that this market is very healthy. This is a very good sign for Red Deer because the industrial sector is such a large part of our economy.”
Soderquist looked at 15 industrial districts in Red Deer and adjacent areas during June and July, from Blindman Industrial Park in the north to Piper Creek and McKenzie Industrial business parks to the south. The city-owned public works yards in Riverside Heavy Industrial Park were excluded.
It was determined that 11,526,000 square feet of industrial space were occupied, and 427,200 square feet were empty. The vacancy rate ranged from zero in Petrolia Business and Riverside Heavy Industrial parks, to 8.21 per cent in Chiles Industrial Park.
Garcelon believes construction of industrial facilities slowed during the recession, resulting in demand outstripping supply when the economy strengthened.
“Going forward, it’s hard to say exactly what will happen,” he added, speculating that prices and lease rates could rise and spur more building.
The Soderquist study also looked at the amount of industrial land available for development. It concluded that there are 645 acres spread out over 177 parcels. These include 148 acres in Burnt Lake Business Park and 102 acres in Clearview Industrial Park.
“There seems to be a lot of land out there,” said Garcelon, noting that his company’s review did not include the city-owned Queens Business Park west of Hwy 2 because the land there had not been subdivided.
Add the undeveloped industrial land in other nearby communities, and Central Alberta’s inventory is pretty deep, he said.
“In any market where you have excess supply, prices drop — which is not necessarily a good thing.”
Conversely, added Garcelon, a surplus of industrial land could quickly become an asset if the economy booms.
Soderquist believes its industrial land survey is the first of its kind ever compiled for Red Deer. It should be a valuable tool for appraisers, said Garcelon, especially if the results are updated over time and trends revealed.
“We’re hoping that next year we can update it.”
hrichards@www.reddeeradvocate.com