The Crossings, Lethbridge Market Study Update October 2012 Prepared for: City of Lethbridge Prepared by: MXD Development Strategists Ltd. www.mxddevelopment.com 0
Retail Market Update According to a 2012 report by Avison Young Lethbridge, the overall Retail Market in Lethbridge has been steady, with certain areas providing bright spots. One bright spot is the Retail in West Lethbridge and investment opportunities have remained a desirable commodity. The North and South regions have experienced decreased growth since 2010, but market indicators have remained relatively stable. Retail Market Highlights Firms including the Alberta Treasury Branch, Bank of Montreal, and TD Canada Trust were scheduled to open in late 2012 in West Lethbridge. During the same period, pre-leasing activity started on West Gate Centre, with over 75% leased before construction. The site is set to host a gas station, restaurants, car servicing, and small retail shopping stores. Construction is slated to begin in late 2012. Local brokers have reported that the current average retail market lease rate is approximately $15 PSF. This figure is very similar to the average lease rate in 2010 of $14.41. This illustrates that the market has remained fairly consistent over the past few years. Similar to conditions in 2010, smaller and newer spaces in desirable areas, such as West and South Lethbridge, are drawing lease rates between $22-34 PSF. This signifies that the average lease rate figure may not be a true representation of market rates, An illustrative map is provided to show some of the active listings in the Lethbridge area. The purpose of the map is to show where the most desirable areas for Retail leasing as indicated by the asking rates PSF. The Avison Young 2012 Report mentions the lifestyle development The Crossing, as a desired development set to host a mix of retail, residential, and community amenities. 1
1) Centre Village Mall Total SF: 1,000 17,691 Net rent: $12/PSF 2) 1505 Mayor Magrath Drive Total SF: 1,200 6,000 Net rent: $15/PSF 3) 401 highlands Blvd W Total SF: 2,000 3,000 Net rent: $34/PSF 4 1 4) 2414 Fairway Plaza Road Total SF: 1,308 Net rent: $22/PSF 5) 3120 32 nd Street S Total SF: 1,350 4,120 Net rent: $25/PSF 6) 123 Sunridge Road W Total SF: 1,000 10,000 Net rent: $28/PSF 6 2 3 5 Active Listing Map 2
Office Market Update The Lethbridge Office Market is largely located within the downtown core, with some office spaces available in the suburbs. However, a trend occurring over the past few years has been the increase in the supply of new office space in suburban areas. The result has been some downtown tenants have left to the newer suburban spaces, which can be shown by comparing the vacancy rates between downtown and the suburbs. Downtown Office vacancy in Q2 2012 was listed as 13%, which is down from 16% vacancy as reported in 2010. Suburban vacancy dropped from 11.5% in Q2 2011, down to 8.1% in Q2 2012 Downtown Class A average rental rates are approximately $15 PSF, but can ask between the range of $10-25 PSF. The average lease rate of $15 PSF is higher than the reported average of $12.57 PSF in 2010, showing the growth and increasing strength of the market. Office Market Highlights New construction includes a 30,000 SF office within the mixed-use Southgate Station Development. Preleasing for the office space reach upwards of 90% before construction, with construction slated to begin in late fall 2012. A 10,000 SF office building is scheduled from construction in late 2012 in the W.t. Hill Business Park. The Lethbridge Office Market as a whole is anticipated to continue to grow, and experience positive absorption throughout 2013. The current trend of tenants and owners leaving the downtown core for the new suburban spaces is also anticipated to continue through 2013, according to report issued by Avison Young. An illustrative map is provided to show some of the active listings in the Lethbridge area. The purpose of the map is to show where the most desirable areas for Office leasing as indicated by the asking rates PSF. 3
1) 236 36 th Street N Total SF: 2,500 6,028 Net rent: $6/PSF 2) 421 Mayor Magrath Drive S Total SF: 1,180 4,300 Net rent: $11/PSF 3) 200 4 th Avenue S Total SF: N/A Net rent: $15/PSF 4) 542 7 th Street S Total SF: 2,000 3,717 Net rent: $9/PSF 3 4 2 1 5) 2414 Fairway Plaza Road S Total SF: 1,308 1,512 Net rent: $22/PSF 6 5 5) 3120 32 nd Street S Total SF: 1,350 4,120 Net rent: $25/PSF Active Listing Map 4
Multi-Family Housing Update The last decade has seen an average of 545 new single family starts and 200 new multi-family housing starts. A consistent trend occurring in Lethbridge is periods of strong market-driven development followed by construction lags to allow the market to absorb the new units, followed by another development boom. According to reports by the Economic Development of Lethbridge, population growth, and accompanying demand for new housing is coming from international workers and college students. Lethbridge College recently announced a $55.6 million pledge by the government for the College s Trades and Technology Renewal and Innovation Project. The project is targeting developing a state-of-the-art training center to help develop Alberta, and Lethbridge s workforce. This will in-turn attract more students, and international workers, which can add demand to the housing market. Housing Market Highlights The 2012 year-to-date (YTD) multi-family housing unit construction includes 24 new duplexes worth approximately $2,602,000 in construction value. The number of new duplexes brought into the market as of September 2012 is below half of the YTD total in 2011 52. This pattern is consistent with analysis offered by the Economic Development of Lethbridge, as mentioned above. New developments also include 10 new apartment/ condos, worth approximately $9,923,000 in construction value. The following Tables illustrate the amount and type of building permits issued by Lethbridge over the past decade, as well as the average sale/rental rates of several projects throughout the Lethbridge region. Lethbridge College recently constructed the Kodiak House, featuring 109-unit tower, which is reported as already at full-capacity. This signifies the current demand for student rentals, and present an opportunity for further and continued development in Lethbridge. Source: http://www.lethbridgecollege.ca/news/all/55-million-pledged-collegetrades-and-technology-project 5
Lethbridge Residential Building Permits by Housing Type 2002-2012 Building Permits 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD (As of Aug) Average 02 to 11 New Residential Building Permits NEW Single Family 798 978 756 796 988 947 538 628 597 430 353 746 579 553 556 544 703 739 436 479 522 341 319 545 NEW Multi Family (Duplex/Apartment/Condo/Townhome) Active Lethbridge Sale/Rental Rates Sample Table %MF 219 425 200 252 285 208 102 149 75 89 34 200 27.4% 43.5% 26.5% 31.7% 28.8% 22.0% 19.0% 23.7% 12.6% 20.7% 9.6% 26.9% Project Name Location Type Units Sale/Rental Average Sale Price Average Rental Price Mason Point Landing West Townhomes 48 Sale/Rental 225,000-260,000 950-1,500 Woodsmere Manor West Condos 70 Rental n/a 800-950 Woodsmere Place West Townhomes 56 Rental n/a 850-1,000 Copperwood Villas West Condos 96 Sale 190,000-300,000 1,200-1,800 Legacy at Copperwood West Condos - Sale/Rental 170,000-210,000 n/a The Brownstones West Townhomes - Sale 210,000-270,000 1,100-1,500 Sundance Estates West Townhomes 76 Sale 220,000-350,000 n/a Sunridge Townhomes West Townhomes 48 Sale 300,000-600,000 n/a Hearthstone South Duplex - Sale 275,000-400,000 n/a Elements of Coulee Creek South Townhomes 57 Sale 270,000-330,000 n/a Sierras of Courtyard Terrace South Condos - Sale/Rental 170,000-250,000 1,000-1,500 Legacy Ridge North Townhomes 68 Sale 200,000-500,000 n/a 6