Lloydminster 

  Retail Mall Vacancy Survey 

 January 2010 


1.0   Economic Background

The City of Lloydminster is located on the Yellowhead Highway approximately 250 km east of Edmonton and 275 km west of Saskatoon, straddling the border (4th Meridian) between Alberta and Saskatchewan. The population, according to the City of Lloydminster 2009 Census, was estimated at 26,500 persons which was a 3.84% population growth from 2007.  The Alberta side experienced a growth rate of 3.7% since the 2007 census, and the Saskatchewan side had a growth rate of 4.2% in the same time span.  This equates to 17,402 persons (66%) on the Alberta side and 9,100 persons (34%) on the Saskatchewan side.

Lloydminster is surrounded by some of the richest farmland in western Canada. The district enjoys a buoyant economy, mixed agricultural and oil industry base. The city centres a 2,500-square-mile oil field, said to be the largest concentration of heavy crude in North America. Oil activities, particularly servicing, refining, pipelining and upgrading, have been a predominant Lloydminster activity for many years.

One measure of economic activity in a city is the level of construction. Building permits for 2009 (obtained from the City of Lloydminster Engineering/Planning Dept.) were 47.7 million, compared to 94.5 million in 2008 and 114.5 million in 2007.  The number of permits have decreased dramatically from 775 in 2008 to 393 units in 2009.  Of these, 114 were dwellings.  This is a 49% decrease from 2008.  This is mainly due to the overall global economic recession.

The MLS residential sales statistics for the city show that the Saskatchewan side had 120 sales (28%)  and the Alberta side had a total of 309 (72%).  This includes only urban residential properties within the City of Lloydminster. The average house price on the Alberta side was $281,197 down marginally from $282,334 in 2008 and the average house price on the Saskatchewan side was $215,739 also down from $234,381 in 2008.  This is an  approximate 0.0015% decrease from the previous year for Alberta and 11.0% decrease for Saskatchewan  The average house price is the total sale price of all residential sales divided by the number of sales.  The average house price on the Alberta side is approximately 30% higher than the Saskatchewan side. Notably, out of the 429 residential sales in Lloydminster, 74 or 17% were condominium ownerships.

The following table summarizes the MLS statistics and reflects the past 9 years:
 

Table #1  
MLS RESIDENTIAL STATS 
As Of December 31, 2009

Province

ALBERTA   

SASKATCHEWAN   

Year

# of Sales  

Gross Sales
(Millions)  

Avg. Price/home
(Alberta)   

# of Sales  

Gross Sales
(Millions)

Avg. Price/home
(Sask.) 

2000

 

 

$111,997

 

 

$85,156

2001

370

$49.67

$134,253

219

$21.06

$96,154

2002

368

$47.58

$129,293

236

$22.13

$93,758

2003

368

$58.07

$152,413

181

$20.56

$113,597

2004

495

$85.25

$172,224

262

$29.83

$113,874

2005*see note

347

$67.20

$193,660

181

$27.52

$153,028

2006

378

$79.10

$214,944

176

$28.50

$169,630

2007

400

$106.15

$272,885

278

$56.13

$210,998

2008

349

$96.84

$282,334

208

$47.81

$234,381

2009

309

$80.35

$281,917

120

$23.95

$215,739

Decrease from
2008 to 2009

40 

$16.49 

0.0015%

 88

$23.86 

11.0%

 

*NOTE: Commencing in 2005, the statistics are only the City of Lloydminster.  Previous years included Lloydminster and the surrounding rural towns and acreages.

 

According to CMHC, apartment vacancy rates increased significantly from 0.9% vacancy in 2008 to 8.8% in 2009, compared to 0% in 2007 and 0.2% in 2006.  There are 148 vacant apartments in the entire city. The 8.8% vacancy rate resulted in very slight (0.01%) rental rate increases in 2009 compared to an 8.5% increase in 2008 and a 6% increase in 2007. The average 2 bedroom rent in Lloydminster was $842/month.  The 2009 apartment survey consisted of 1,679 suites, of which nearly one third are located on the Saskatchewan side of the border. The following is a chart for Lloydminster showing the average apartment rental rates from 2002 to 2009:
 

Table #2   
CMHC STATS 
Lloydminster - October 2009

Average Apartment Rent

2002  

2003  

2004  

2005

2006

2007

 

2008

 

2009

Bachelor

$408

$431

$443

$406

$467

$515

$562

$508

1 Bedroom

$479

$503

$521

$540

$581

$608

$658

$666

2 Bedroom

$575

$600

$625

$634

$710

$755

$833

$842

3 Bedroom and +

$639

$672

$700

$711

$781

$823

$872

$890

Average Rent

$540

$565

$588

$601

$662

$704

$764

$771

 

Local industries include the Heavy Oil Bi-Provincial Upgrader, the largest pre-manufactured home factory in western Canada (Nelson Homes), plus several other smaller secondary manufacturing and distributing companies, many of which are related to the oil industry.

Husky Oil  is the largest employer  in Lloydminster. Since the construction of the Bi-Provincial Upgrader in 1992,  Husky has built the 215 megawatt Meridian Co-generation Plant which reached full operating capacity in 1999.  Over the past year, work has been completed on western Canada's largest ethanol plant which employs 25-30 full time permanent positions.  This plant supports the local economy by purchasing goods and services from local suppliers including approximately 350,000 tonnes of feedstock from local producers, produces approximately 130 million litres of fuel grade ethanol per year and produces approximately 134,000 tonnes of distillers dried grain with solubles (DDGS) per year.   Husky Oil has also announced a future expansion of the upgrader, however the timing of this expansion has not yet been determined.

Lloydminster has numerous parks and playgrounds, a golf course and other leisure facilities, including an outdoor swimming pool and an indoor swimming pool and water slide facility.  Common Wealth Centre is a $25 million dollar multi-plex sports complex on the south side of the city.  Built in 2005, this multi-use recreational complex contains twin ice arenas, twin indoor fieldhouses, a fitness wellness center, a physiotherapy/sports medicine center, upper level running track, exterior oval speed skating rink, child care space, retail sports shop, concession kiosk, lounge/kitchen, etc. and services Lloydminster and the surrounding communities.  The City of Lloydminster has recently finished construction of a new fire hall, which is located on the truck route or 59th Avenue and is in the southwest quadrant of the city. West Harvest Express is a newer hotel with direct access to the multi-plex via a second floor walkway, and was built to service the expected clientele of Common Wealth Centre. Holiday Inn Express is also a newer hotel located on 44th Street (Highway No. 16 W.) containing 100 rooms, a pool, work out room and Smitty’s restaurant.

There are a full range of educational facilities, including the multi-million dollar Lakeland College Campus developed in the southwest sector of the city. This campus provides community college courses up to university degree courses in several disciplines. The Vic Juba Community Theatre is also a 555 seat arts and entertainment theatre on the Lakeland College Campus. 

As discussed above, the city has a diversified economic base which is expected to maintain and improve for the foreseeable future.

2.0   Study Area and Inventory 

The study area includes the entire City of Lloydminster. The majority of the strip retail is concentrated on 44th Street (Trans Canada Yellowhead Highway), which runs the entire width of the city. There is a secondary Highway commercial strip which is 50th Avenue, the Meridian, also known as Provincial Highway No.17. Excluded from this study is the retail component of the downtown core. The malls are classified as either an enclosed retail mall or strip development which includes the Cornerstone Power Center & "Big Box" retail. Excluded from the survey were any one-storey free-standing buildings on pads unless they were part of a mini power center, "Big Box" retail or in the Cornerstone Power Center.

The total inventory is approximately 1,683,318 sq. ft., including one enclosed mall located in the centre of the city on the Trans Canada Yellowhead Highway on the Alberta side of the border. Anchors in this enclosed mall include Sears, Zellers and Safeway. CRU's (Commercial Rental Units) added this year into the strip category were 49,442 sq. ft. which included 4 buildings which were previously owner occupied and are now tenant occupied. Also added were 3 new buildings in the Cornerstone Power Center and one new building in Star Plaza (Saskatchewan side).

3.0   Retail Space Overview  

The Lloydminster retail market presently has 205,802 (12.2%) sq. ft. in the enclosed mall and 1,347,366 (80%) sq. ft. in strip retail on the Alberta side of the city and 130,150 (7.7%) sq .ft. on the Saskatchewan side. As a result, the addition of any retail development 10,000 sq. ft. or over can have a significant impact on the vacancy in that category over the short term. Establishing absorption figures over a period of time is one of the objectives of the study and will come into play in the future as historical information is available.

The information gathered and summarized in the following table is effective as of December 31, 2009.
 

Table #3  
RETAIL MALL SURVEY 
EXECUTIVE SUMMARY - Effective December 31, 2009, Conducted January 7, 2010

Type

Total Area  
(Sq.Ft.)

Anchor  
(Sq.Ft.)

CRU's  
(Sq.Ft.)

Total  
Vacant  
(Sq.Ft.)

Vac.
2009

Vac.
2008

Vac.
2007

Vac.
2006

Vac.
2005

Vac.
2004

Vac.
2003

Enclosed

205,802

140,451

65,351

0

0%

0%

1.04%

1.04%

0%

1.4%

0.7%

Strip

1,347,366

710,334

637,032

17,802

1.32%

1.5%

0.24%

0.5%

1.4%

1.0%

1.5%

Total Alberta

1553168

850,785

702,383

17,802

1.15%

1.8%

0.4%

0.6%

1.0%

1.1%

1.3%

Total Sask.

130,150

0 

130,150

8420

6.47%

9.5%

15%

4.8%

5.9%

8.1%

3.6%

Total City

1,683,318

850,785

832,533

26,222

1.56%

2.0%

1.85%

1.0%

1.4%

1.7%

1.4%

 

4.0    Vacancy 

The overall city-wide mall vacancy is 1.56% with 1.15% on the Alberta side and 6.47% on the Saskatchewan side. This 6.47% is due to only 2 vacant retail spaces totalling 8,420 sq. ft.  As noted earlier, the addition of any retail development 10,000 sq. ft. or over can have a significant impact on the vacancy , as is the case here.  The Alberta side of the city has 92.3% of all the mall retail space. The Alberta vacancy decreased from the previous year from 1.8% in 2008  to 1.15% in 2009. 

As of December 31, 2009,  the vacancy remained unchanged from 2008 to 2009 in the enclosed mall at nil vacancy.  Vacancy decreased in the strip category from 1.5% in 2008 to 1.32% in 2009.

The overall city vacancy rate has decreased from the previous year from 2% to 1.56%.

5.0   New Construction 

Over the last decade most of the new retail construction in Lloydminster has been concentrated on the Alberta side of the border. Commercial vacant land parcels fronting onto 50th Avenue (Highway No. 17 S.) on the Saskatchewan side of the border are actually being or have already been developed.  Added to the survey this year in the anchor category were two buildings being Shopper’s Drug Mart and Future Shop, etc. (currently under construction) and 1 new CRU (Scotiabank), all located in the Cornerstone Power Center.

CRU's (Commercial Rental Units) for mini power centers added this year into the strip category includes  a new 11,000 sq. ft. building located in Star Plaza (Saskatchewan side).

Lloydminster is strategically located between Saskatoon and Edmonton's trade markets allowing for Lloydminster to have a growing trade area of well over 100,000 people.  The retail sector has definitely had a positive economic impact on the community.

All indications point to a steady demand for retail space on the Alberta side of the city and a slight demand on the Saskatchewan side of the city.

6.0   Rental Rates 

Discussion with leasing agents indicate that  there is stronger interest on the Alberta side. Historically, the Saskatchewan side leases up more slowly, at a slightly lower rate than comparable space on the Alberta side.

Rental rates for the strip malls and mini power centers on the Alberta side are in the $10.00/sq. ft. triple net to $20.00/sq. ft. triple net range and appear to be in line with retail rates in other major urban centers in Alberta.  The rental rates on the Saskatchewan side appear to be in the $8.50/sq. ft. triple net to $14.00/sq. ft. triple net range, which is also in line with rental rates for cities of similar size.

Leasing inducements which include rent free periods and/or tenant improvements appear to be minimal in the Lloydminster market. This is due primarily to the limited strip retail available and the pent-up demand for any new construction. The majority of new construction has been on a pre-leased basis.

7.0   Acknowledgements 

Our sincere appreciation is extended to the Lloydminster Economic Development Authority (LEDA) and the Engineering & Planning Department, both of the City of Lloydminster.  Many thanks to Musgrave Developments and Musgrave Agencies for their input regarding the "mini" Power Centers.  Also, thanks to Century 21 for their valuable input regarding leased space. Various other real estate agents and property managers also provided valuable assistance.  

8.0   Qualifications 

Readers of this Study are welcome to use the information as deemed appropriate, providing McInnes & Company Appraisals Ltd. and Brunsdon, Junor, Johnson Appraisals are quoted as the reference sources. The information contained herein is believed but not warranted to be accurate. Readers are cautioned to make their own investigation before making any financial decisions.

McInnes & Company Appraisals Ltd. is a real estate appraisal firm with many years experience, providing a wide range of appraisal services, with the primary market being the northwest portion of the Province of Saskatchewan and the northeast portion of the Province of Alberta. 

Brunsdon Junor Johnson Appraisals who co-author this document is a real estate appraisal firm providing a wide range of appraisal and consulting services, with the primary market being the north central half of the Province of Saskatchewan. 

 

McInnes & Company Appraisals Ltd.

Ste. 201, 5303-50 Avenue

Lloydminster, SK  S9V 0P9

Phone: 306-825-3500 Fax: 306-825-3507

Website: www.mcinnesappraisals.com

 

email us at: office@mcinnesappraisals.com.

 

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