By Foy & Co. Investment Real Estate Services
The Canadian self-storage market has remained stable over the past year. A few regions even experienced growth in revenue and occupancy, while other markets saw new development.
Foy & Co. Investment Real Estate Services recently published its National Self Storage Review, which included the following city-by-city update on the Canadian self-storage real estate market, plus the company’s predictions for growth.
Halifax continued to be a relatively stable market with some growth in both rates and occupancy.
Montreal had a lot of development over the last couple of years, and it seems as though some of the more aggressively built areas are starting to see stability and even rate growth. As the market continues to stabilize―and if there continues to be less development―we should see some reasonable rate growth over the coming years.
Ottawa continued to see significant development, although on all reports, the market continues to lease well. As Ottawa is a government town, things haven’t slowed at all, and all forms of real estate continue to perform. We expect to see more development over the coming years and expect absorption to continue to tick along while rates hold steady.
Toronto had a good start in 2010 but a disappointing summer. Many in the industry attribute this to the introduction of the harmonized sales tax (HST), implemented in July. HST created an 8 percent increase in cost to all rentals. Others in the industry suggest that facilities worked hard to ramp up prior to July 1, which meant a slower summer. That said, many sites are well ahead of where they were last year on an economic basis for consistent rates and occupancy growth.
Winnipeg has seen a massive amount of new development relative to its size. So far there hasn’t been any negative impact on rates or occupancy, as both continue to perform well. We suspect development will tail off while absorption continues at an excellent pace.
Saskatoon continues to be the envy of the storage industry. Rates have continued to increase while facilities remained at full capacity. With development being very hard to get approved, rates should continue to grow.
Regina had a softer summer in 2010, which is mostly being blamed on weather. While most seem disappointed, Regina only trails Saskatoon and Winnipeg in overall performance. We expect Regina to continue to perform well as there seems to be little opportunity to develop.
Calgary experienced an “off” year in 2009, but fortunately, 2010 proved to be much better. Excess inventory has continued to get absorbed but not quite enough for rates to move—yet. With what’s going on in other sectors in the city, Calgary’s prospects should be fairly good for late 2011. There are currently several development projects in the planning stages and, depending on when they happen, we might even see some growth in rates.
Edmonton continues to be an interesting market. While the market held relatively stable, and even eked out some rate increase in 2008 and 2009, 2010 was a soft year. Edmonton had one of the weaker summers but is slowly absorbing recently developed space. As the economy picks up, Edmonton should have a relatively strong rebound.
Vancouver seems to be the most stable of the larger cities in Canada. It historically has had high occupancy and solid rent increases yearly. The last few years have seen a reasonable amount of good development, which has put a bit of a dent in occupancy and rate increases. However, Vancouver still holds as one of the countries most predictable markets.
Foy & Co. Investment Real Estate Services specializes in equity raising and brokerage services for the Canadian self-storage market. The National Self Storage Review, volume 10, can be downloaded for free at www.foyco.ca .