Mounting Pressure Continues on Kelowna Commercial Real Estate

Kelowna Commercial Real Estate Market Waits for New Inventory as Pressure Continues to Build

2018 is in the books and it proved to be another busy year for the MCL Real Estate Group.

The Kelowna commercial real estate marketplace continues to evolve, driven by higher demand, higher competition and reduced available inventories. Add a high appetite for commercial property from the cannabis industry, Canada’s new green sector, for both large industrial buildings and land, as well as prominent retail locations for the establishment of retail or dispensary locations, and you get a somewhat volatile marketplace.

We have seen several large companies in Kelowna vacate commercial spaces in 2018, including Sears, Greyhound, OK Builders & Home Outfitters creating large holes of available space in the local marketplace. Some of these large opportunities have been sold or have deals pending, although a few larger retail opportunities remain available at Orchard Park Mall and Central Park, as larger anchor tenants are not easily secured in this market.

The increased demand and limited inventories have caused the lease rates in Kelowna to start to climb. This is especially noticeable on the new mixed-use properties around town. New commercial space is slowly becoming available but at a price: The Shore – $37/SF, ELLA – $32/SF, 1810 Gordon Dr – $30/SF, 1189 Ethel St – $30/SF, Cambridge House – $29/SF, Brooklyn – $28/SF, The District – $26/SF.

Cannabis dispensaries are also adding upward pressure on retail space as many prominent locations were leased at a premium prior to licensing. The City of Kelowna had applications for 41 dispensary locations and are currently nearing the approval of seven of them for opening this summer.