The latest market report from Avison Young is predicting a boom of new inventory supply for the retail sector in Lethbridge next year. It cites low vacancy rates and strong market demand as driving factors.
“This has been a positive year for retail real estate and we anticipate seeing substantial construction as we head into 2024,” said Ashley Soames, senior associate in the Avison Young Lethbridge office. “Although construction costs are high, we are still seeing the demand for growth that supports new development.”
The current vacancy rate for retail is estimated at three per cent and the report points out a growing population means more demand for retail goods and services. Long tenancies, with leases averaging 7.7 years, also contribute to the need for new spaces.
“Retail real estate in Lethbridge has had sustained growth since 2020, with no signs of slowing down despite national headwinds,” said Jeremy Roden, executive vice president in the Avison Young Lethbridge office. “While landlords and tenants may be acting cautiously, and some deals may be taking longer, they are still getting done.”
Lease rates for new builds have been driven by high construction costs and average between $30 and $35 per square foot in most of south and west Lethbridge. Existing spaces, primarily downtown, average between $12 and $16 per square foot.