Prepare now to grow
Consultants suggest city should earmark industrial pot sites
Penticton is sitting relatively pretty with a 5.4 per cent vacancy rate for retail space, according to a consultant hired to assess future demand for commercial properties.
“We know anecdotally that 5.4 per cent is a really healthy number,” James Smerdon, a Vancouver-based vice-president of Colliers International, told city council Tuesday. “Contrary to what people might think, landlords don’t actually like zero per cent vacancy, because a bit of vacancy allows for existing companies and tenants to expand within their current space and also it allows new entrants to come into the market and actually find suitable space.”
Smerdon noted the 12.4 per cent vacancy rate specifically for downtown retail space “is creeping up a little bit high, but compared to the Vernons and Nanaimos and the other markets that you might compare yourselves to, I think you’re doing just fine.”
His report was ordered by the city to inform its work on the Official Community Plan update. Findings were based on population projections and interviews with local business people. The report estimated demand 30 years into the future for retail, office and industrial space.
On the industrial front, the current supply is estimated at 2.14 million square feet with a 6.5 per cent vacancy rate, which is “a little bit low compared to markets of a similar context throughout Canada,” said report co-author Russell Whitehead, a planning consultant for Colliers.
He estimated future demand will range from 700,000 to 4.2 million square feet. (For the sake of comparison, an NHL rink is 17,000 square feet).
Whitehead noted the burgeoning marijuana industry is likely to come calling in the South Okanagan due to its favourable climate, and he recommended the city, which has little room to grow, flag suitable sites and densify where possible.
Demand for office space, of which there is currently about 770,000 square feet with 7.5 per cent vacancy, is expected to remain “soft,” according to Whitehead, who foresees modest expansion of professional services like lawyers and doctors. He estimated the city will need to add between 40,000 and 265,000 square feet to meet demand.
And on the retail front, the report estimated the current supply at 2.5 million square feet, and projected future demand will range from 50,000 to 480,000 square feet.
Most crucially, Whitehead doesn’t foresee a full-service grocery store arriving in the downtown core anytime soon.
“We see the potential for maybe a small specialty store: bakeries, butcher, cheese shop, olive oil, those sorts of things,” he explained, adding those types of retailers will be encouraged by more mixed-used developments that add “body heat” to the downtown core.