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MARKET REPORTS + UPDATES

September 2018 Alberta Market Report

10 September 2018

Courtesy of CoStar

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MARKET SUMMARY

The latest Canadian GDP growth data exhibited a resilient annualized growth rate of 2.9% in Q2 2018, a sharp increase from the 1.4% figure in Q1 2018. However, the uncertainty created by the trade wars and the renegotiation of the NAFTA, as well as the newest delays in the Trans Mountain pipeline expansion, will weigh on the Canadian economic outlook for the second half of 2018. Despite this, GDP growth for Canada in 2018 is expected to come in between 2.0% and 2.2%. Although Alberta’s recovery continues, and GDP growth prospects for the province have been curtailed, the province is still expected to outperform Canada as a whole, with GDP growth of 2.4%. The slowdown in Alberta is partially due to a slowdown in capital investment in the energy sector and a continued weak housing market, which is not being helped by more stringent mortgage rules and higher interest rates. By comparison, Calgary and Edmonton are expecting GDP growth of 3.0% and 3.4% in 2018, respectively.

Alberta’s employment market is expected to be one of the strongest in Canada in 2018, growing by 1.9%. Although Calgary is expected to see the lion’s share of this, with employment expected to grow by 2.1% versus only 0.5% in Edmonton, the experience in 2018 year-to-date (to July) has been less spectacular and mixed. Calgary has actually experiencing a decline in employment of -0.8% and Edmonton experiencing an increase of 0.9%. Employment related to the Agriculture, Forestry, Fishing and Mining sector is also expected to outperform across the province, growing by 8.0% in Calgary and 6.1% in Edmonton, whereas employment in the Finance, Insurance and Real Estate (FIRE) and Professional, Scientific and Technical Services (PSTS) sectors are expected to decline by -2.1% and -3.1% in Calgary and increase in Edmonton by 4.3% and 5.4%, respectively. Oil prices and the Trans Mountain pipeline expansion will continue to be a key factor to economic growth in both Canada and Alberta specifically, as it will support job creation and consumer spending. Alberta households continue to bounce back, but it will take some time until consumer confidence picks up and translates to higher retail sales. Higher interest rates and increased cost of debt servicing will no doubt impact consumer consumption, and the most recent retail sales data for June 2018 is indicating a pullback, with expectations that retail sales will shrink in 2018, down 0.7% for both Calgary and Edmonton.

Given this economic backdrop, the office, industrial and retail commercial real estate markets in both Calgary and Edmonton continue to stabilize and improve. The Calgary office market vacancy rate edged up 60 basis points (bps) year-over-year to end August 2018 at 15.6%, and although the average net asking rental rate increased slightly, up 2.0% since the end of Q2 2018, to end August 2018 at $15.52/sq. ft./annum, on a year-over year basis it is down 12.5%. The bigger story remains the delta between downtown and the suburbs. Downtown vacancy is up 30 bps year-over year to 20.3%, creating many options for suburban tenants that are looking for space and willing to relocate downtown. Furthermore, net asking rents downtown have decreased by 23.5% year-over-year to $13.68/sq. ft./annum, which is now well below suburban rents, at $17.64/sq. ft./annum, which have increased slightly, by 0.2% year-over-year. As a result, suburban vacancy actually increased faster than the downtown vacancy rate, up 70 bps year-over-year to 10.6% at the end of August 2018. Although total downtown vacant space continues to rise, downtown sublet space accounted for ‘only’ 26.3% of total vacant space at the end of August 2018, compared to 32.4% at this time last year. Expect office vacancy to continue increasing this year with the delivery of approximately 760,000 sq. ft. of new supply at TELUS Sky, however, once this property is delivered to market, the development pipeline downtown will have completely dried up. Despite this, with availability downtown hovering closer to 23%, this rebound will be drawn out, with rental rates expected to continue edging down through 2020.

On the industrial side, Calgary’s vacancy rate at the end of August 2018 was 5.2%, down 150 bps year-over-year, however, rents were also down by 1.5% over the same period to $9.25/sq. ft. per annum. The Calgary industrial market is strengthening its status as a key Western Canada distribution centre, with the transportation and warehousing sector expected to grow by 4.0% in 2018. There is currently 3.1 million sq. ft. of industrial space under construction in Calgary, including Amazon’s new 600,000 sq. ft. Western Canada distribution centre in Balzac, which is slated to open later this year and bring an additional 1,000 permanent jobs to the Calgary market. On the retail front, despite Sears shutting down earlier this year, the retail market remains tight, with a vacancy rate of 2.6% at the end of August 2018, down 20 bps year-over-year, however, the average net asking rental rate for retail space was down -3.5% year-over-year to $25.37/sq. ft. per annum. High debt levels combined with households in Alberta still trying to rebalance their budgets following the recession, continues to create a drag on retail sales. Increasing interest rates and the fall out in consumer confidence following the newest delays in the Trans Mountain pipeline expansion will continue to supress the retail recovery in the province.

As for Edmonton, the overall office vacancy rate was down 230 bps year-over-year to end August 2018 at 9.2%, however, net asking rents have decreased by 4.6% over the same period to end August at $17.70/sq. ft./annum. For comparison purposes, downtown and suburban vacancy rates are 10.1% and 8.4%, respectively, with August 2018 downtown net asking rents averaging $17.28/sq. ft./annum (down 9.8% year-over-year), just below the suburban average of $17.98/sq. ft./annum average (down only 1.3% year-over year). Although the office market continues to perform well, new supply has hit the market and tenants are moving from the old to the new, with some obsolete buildings in the downtown market experiencing persistent vacancy, and as a result are driving down average net asking rental rates. This is creating a dynamic where downtown vacancy is above that of suburban, and downtown rents are below suburban rents. As a result, some landlords investing heavily in order to bring their older properties up to the standards of the newly delivered towers downtown. A perfect example of this is AIMCo’s plans for HSBC Bank Place, a 317,000 SF office tower on 101st Street. Preliminary work got underway in June 2018, with AIMCo planning to completely overhaul both the exterior and interior of the building with a triple-glazed curtain wall system, floor-to-ceiling view glass and new mechanical and electrical systems. They are targeting both LEED Gold Certification and WELL Gold Certification.

The industrial market vacancy rate decreased by -70 bps year-over-year, ending August 2018 at 5.9%, however, the average net asking rental rate was down -1.1% over the same period to $9.22/sq. ft./annum. The industrial market continues to experience increased tenant demand from traditional users, like the oil sector, but also an increase in demand from both the cannabis industry and cryptocurrency miners due to the low cost of energy in Alberta, and as a result, construction activity has picked up, with 1.4 million sq. ft. currently under construction, up from 1.0 million sq. ft. at this time last year. Retail vacancy is down 70 bps year-over-year to end August 2018 at 3.5%, with the average net asking rental rate up 19.7% over the same period $24.48/sq. ft./annum. Despite higher interest rates and increasing debt service costs which could result in a significant drag on retail sales, Edmonton’s diverse economy is performing well and retail sales are expected to increase by 1.7% in 2018 and 2.4% in 2019. Fall out from the newest delays in the Trans Mountain pipeline expansion and the impact it has on consumer confidence will likely continue to supress the retail recovery in the province.

These insights are made possible through CoStar, the largest commercial real estate source for property listings for sale or lease in Canada. CoStar enables users to gain insight into the 28,545 properties currently tracked in Alberta, which include 2,096 properties for sale and 7,624 spaces for lease.

CoStar conducts constant, proactive research with a team of 60+ researchers making over 12,000 database updates each day.

Learn how CoStar can help accelerate your business. Request a Demo.

OVERALL MARKET ACTIVITY
PROPERTIES TRACKED

 

CALGARY

 

TOTAL

15,441

 

OFFICE

 

1,531

INDUSTRIAL

 

4,129

RETAIL

 

4,612

 

EDMONTON

 

TOTAL

13,104

 

OFFICE

 

1,112

INDUSTRIAL

 

5,190

RETAIL

 

3,751

 

ALBERTA

 

TOTAL

28,545

 

OFFICE

 

2,643

INDUSTRIAL

 

9,319

RETAIL

 

8,363

 

PROPERTIES FOR SALE

 

CALGARY

TOTAL

 

899

LAST 30 DAYS

 

NEW LISTINGS ADDED

56

 

OFFICE

 

158

PRICE / SQ. FT

$262

INDUSTRIAL

 

335

PRICE / SQ. FT

$187

RETAIL

 

113

PRICE / SQ. FT

$330

 

EDMONTON

TOTAL

 

1,197

LAST 30 DAYS

 

NEW LISTINGS ADDED

100

 

OFFICE

 

296

PRICE / SQ. FT

$260

INDUSTRIAL

 

349

PRICE / SQ. FT

$192

RETAIL

 

251

PRICE / SQ. FT2

$184

 

ALBERTA

TOTAL

 

2,096

LAST 30 DAYS

 

NEW LISTINGS ADDED

156

 

OFFICE

 

454

INDUSTRIAL

 

684

RETAIL

 

364

 

SPACES FOR LEASE

 

CALGARY

TOTAL

 

3,949

LAST 30 DAYS

 

NEW LISTINGS ADDED

195

 

OFFICE

 

2,479

AVG. NET RENT / SQ. FT

$15.52

INDUSTRIAL

 

716

AVG. NET RENT / SQ. FT

$9.25

RETAIL

 

861

AVG. NET RENT / SQ. FT

$25.37

 

EDMONTON

TOTAL

 

3,675

LAST 30 DAYS

 

NEW LISTINGS ADDED

300

 

OFFICE

 

1,561

AVG. NET RENT / SQ. FT

$17.70

INDUSTRIAL

 

856

AVG. NET RENT / SQ. FT

$9.22

RETAIL

 

1,441

AVG. NET RENT / SQ. FT

$24.48

 

ALBERTA

TOTAL

 

7,624

LAST 30 DAYS

 

NEW LISTINGS ADDED

495

 

OFFICE

 

4,040

INDUSTRIAL

 

1,572

RETAIL

 

2,302

 

FEATURED DEALS

 

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SOLD
True North Commercial Real Estate Investment Trust entered into an agreement to acquire an office building in suburban Calgary in a $26.75 million deal that is scheduled to close next month. Read More.

 

COSTAR UPDATES

 

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CoStar Group was recognized in Fortune magazine’s 2018 “100 Fastest Growing Companies” list, released earlier this month. The company ranked among the year’s top performers in revenue, profits and stock returns.

“It is an honor to be recognized among the nation’s top growth companies for the second year,” said CoStar Group Founder and Chief Executive Officer Andy Florance. “The company’s continued growth supports the vision of working to build a platform where commercial real estate professionals can reach their goals more efficiently and effectively with access to the best tools and information available.”

The Fortune Magazine designation solidifies the company’s track record of proven, documented growth and commitment to delivering cutting-edge advancements on behalf of clients and the industry.
 

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Join us for an exclusive Insights Session and Networking Breakfast on Wednesday September 26 from 8:30am – 11:00am in Edmonton at The Westin at 10135 100th St, or on Thursday September 27 from 8:30am – 11:00am in Calgary at Hotel Arts at 119 12th Ave SW. Gain insight with a quarterly update on the Toronto CRE market, meet our local CoStar research team and see a live CoStar demo. To register, please contact Eileen Hartunian at ehartunian@costar.com.

 

Learn how CoStar can help accelerate your business.

 

 

1-888-226-7404    sales@costar.com

Sustainability trends in commercial real estate and the growing accreditation industry

9 August 2018

Taking a look at the commercial real estate industry and some of the pressures including public perception, tenant and employee demands, and government bodies, we are seeing a commercial developments lean towards sustaining building planning

Collaboration with accreditation companies and consultants that build green building planning and construction is a growing trend.

The Obvious – sustainability is a growing trend

It’s no secret that in the past 10 years we’ve seen a cultural shift, both locally and on a global scale. Smart cars have replaced hummers, and bank statements now ding in your inbox at the end of the month.

In 2015 we saw Canada adopt the United Nations Sustainable Development goals, a bold agenda to improve the health of people and the planet by 2030.  Governing bodies, such as the Sustainable Development Act and Environment and Climate Change Canada, are responsible for enforcing acts and regulations set down to ensure the responsible protection of the environment, sustainability falling under this umbrella.

While the government is setting an agenda and creating an awareness of sustainability issues, compliance with their regulations is easy to meet for the majority of business owners. There is a president set by government, however, the pursuit of a sustainability certificate is more of a voluntary priority for most developers and property owners.

Public perception pushes businesses to go green

Public perception and the demand for transparency gives businesses an avenue from which they can communicate the businesses values, attention to detail, and consideration of long-term planning. In a compensative marketplace, corporate responsibility is another way they can communicate their brand message

Stakeholders reap the benefits of sustainable developments

More than branding, in commercial real estate (CRE), a green building can be marketed on this value-add based on the long term reduction in operating costs.

In fact, according to a 2014 report by Canadian Green Building Trends, companies investing in green buildings are seeing significant dividends from their investments:

  • 82% of reported decreases in energy consumption.
  • 68% of reported decreases in water consumption in their green buildings.
  • The median reduction in operating costs over five years is 17%.
  • The median payback for the investment in a new green building is reported to be eight years

In addition to reducing an owner or tenant’s long term operating costs, green buildings are attracting businesses the have global impact mindfulness, and consideration of strategic employee attraction, retention, and productivity.

According to the National Research Council of Canada, “green-certified buildings demonstrated higher scores on survey outcomes related to job satisfaction, value to clients and stakeholders, evaluation of management, and corporate engagement.”

For these reasons, real estate investors are seeking to meet sustainable building certification and reporting requirements as well as demonstrate effective governance. In an article by Principal Global in late 2017, they stated that “it is a growing belief among investors that good sustainability performance is a proxy for good investment management and raises awareness on what is material in commercial real estate.”

The growing ‘green’ certification industry.

To communicate a commitment to sustainability, rating systems and certifications make external communication seamless. A sustainable development certification makes it easy for the developer to communicate that the building is green. It also makes it easy for businesses looking for sustainable buildings to not only find them, but compare benefits based on rating systems.

LEED

In CRE, the widely respected and utilized as a green building certification program is LEED, or Leadership in Energy and Environmental Design. They have rated and certified more than 92,000 projects in over 165 countries.

Certifications of a building or construction are scored one to four, and are graded on five green design categories including sustainability sites, water efficiency, energy and atmosphere, materials and resources, and indoor environment quality. Based on a business’s score, they are eligible to recieve one of the following certifications:

  • CERTIFIED (40- 49 points)
  • SILVER (50-59 points)
  • GOLD (60-79 points)
  • PATINUM (80 + points)

Conclusion

Science-based targets set by these organizations are continually evolving with consideration for environmental and societal studies, and innovation in green technology. For investors in commercial real estate, this means that strong sustainability performance has become a prerequisite for market expectations of quality. With implications at every stage of the investment cycle, commercial real estate owners need to develop comprehensive approaches to sustainability with responsible property investment as a feature of their portfolio and asset management activities.


2018 MID-YEAR MARKET OVERVIEW

19 July 2018

Courtesy of the Network!!

The following will highlight the total dollar volume and sales within the City of Edmonton through to June 30th, 2018 as well as the number of transactions relating to all sectors of the market covered by The Network. A three year summary is also presented to assist in gauging activity in 2018 in relation to the preceding 2 years.




#1 RE/MAX Commercial Team

3 March 2018

In Las Vegas at the annual R4 convention, RE/MAX Excellence Commercial Division was awarded the top award of #1 RE/MAX Commercial Team Networkwide for the year 2017.

Held annually, the RE/MAX R4 convention celebrates the achievements of its agents, as well as provides an opportunity for networking on a global scale and training and seminars on a variety of topics.


February 28, 2017
DENVER –With over 6,000 real estate agents and brokers from 60 different countries in attendance, RE/MAX kicked off its annual international convention at Mandalay Bay in Las Vegas on Monday night. The Opening General Session, hosted by comedian and entertainer Wayne Brady also featured legendary real estate pioneer and RE/MAX CEO and Co-Founder Dave Liniger.

2016 was the best year we’ve had in residential real estate in 10 years,” Liniger told a lively crowd of RE/MAX agents who traveled from as far as Argentina and New Zealand to attend the week-long convention to learn, network and exchange international referrals. “No one in the world sells more real estate than RE/MAX and we’re the leader in the industry because of the quality of our agents and brokers in this room.” [1]

RE/MAX reaffirmed it is the #1 name in real estate,[2] as 2016 was another dynamic year of achievement and success for the network
  -Over 7,000 agents joined the RE/MAX network
  -U.S. agents averaged 16.7 transaction sides
  -RE/MAX has over 7,000 offices worldwide
  -The global franchisor sold over 900 franchises

“RE/MAX continues to offer the latest in technology and tools to our agents so they can be the best they can be,” said Adam Contos, Chief Operating Officer at RE/MAX, LLC. “Remax.com was relaunched in 2016, with a modern responsive design and improved personalized features, and is now the most visited real estate franchisor website.[3] RE/MAX is an industry leader because of our exceptional network of broker/owners and agents, outstanding technology initiatives and reputation of the brand.”
 
Technology and how it can improve the productivity of agents will be a popular topic during this year’s conference. RE/MAX is a leader in technology, providing RE/MAX Affiliates with the latest online tools and platforms they need to succeed.

Some of those tools include:
  -A single sign-on platform that provides agents free online leads, automated marketing, agent-to-agent referrals and training
  -A state-of-the-art lead generation system that provides online leads from remax.com as well as consolidating all of their online leads from other websites
  -Remax.com, which has provided over 17 million referral-fee free leads to RE/MAX agents since 2006, with 1.1 million leads delivered last year alone

The RE/MAX network is in more than 100 countries and territories and includes over 110,000 agents. Last year, RE/MAX added Norway, Saint Vincent and the Grenadines, Malaysia and Myanmar to its global footprint.

The four-day convention will also feature presentations from Caroline Adams Miller, Dave Ramsey, Erik Weihenmayer and Molly Fletcher. Dierks Bentley will bring the convention to a close with a private concert Thursday night.

2017 MID-YEAR MARKET OVERVIEW

5 February 2018

Courtesy of the Network!!

Economic conditions within the Province of Alberta and the City of Edmonton are slowly rebounding and are projected to remain upward trending for the foreseeable future. This report will highlight the total dollar volume and sales within the City of Edmonton through to June 30th, 2017,  as well as the number of transactions relating to all sectors of the market covered by The Network. 


RE/MAX Excellence Commercial Division - Humaira Naikyar

20 December 2017

Humaira Naikyar from RE/MAX Excellence Commercial Division shares her insight and expertise on retail investment properties. 


2017 RE/MAX COMMERCIAL MARKET REPORT

25 October 2017

Courtesy of RE/MAX of Western Canada

Edmonton saw strong year-over-year increases in total dollar value of commercial property sales during the first half of 2017 as a result of the ongoing stabilization of the oil sector. Alberta’s capital city also saw significant year-over-year growth in total sales value for commercial properties of 39 per cent, topping $1 billion at the mid-year point for the first time in three years.  With the continued stabilization of the oil sector, Edmonton's commercial property market is expected to continue its slow recovery.  With increased activity amongst private investors, there is a feeling of cautious optimism. We look forward to a healthy commercial property market heading into 2018.


2017 Mid-Year Market Overview

4 August 2017

Courtesy of the Network!!

Economic conditions within the Province of Alberta and the City of Edmonton are slowly rebounding and are projected to remain upward trending for the foreseeable future. This report will highlight the total dollar volume and sales within the City of Edmonton through to June 30th, 2017,  as well as the number of transactions relating to all sectors of the market covered by The Network.

RE/MAX Q1 Top Producer Report

14 June 2017


RE/MAX Excellence - Commercial division is honoured to be recognized as the Top RE/MAX Commercial Team in Canada, as well as the Top RE/MAX Commercial Team Worldwide.  Congratulations goes to all of our fantastic team of associates!

2017 Q1 Market Report

5 May 2017

Courtesy of The Network

A quick highlight of the total dollar volume and sales for Q1 2017 as well as the number of transactions relating to all sectors of the market covered by The Network.

2017 Canadian Economic Outlook and Market Report

3 April 2017

Courtesy of Morguard

2016 saw a period of slow growth in some sectors and decline in others. Low oil prices and layoffs resulted in lowered consumer confidence.

2017 should see stabilization and increase in activity.

2016 RE/MAX Commercial Investor Report

4 April 2017

Courtesy of RE/MAX Western Canada

Much of Western Canada continued to experience slower market activity in the first half of the year as regional economies continued to recover from the downturn in the oil sector.

The commercial real estate markets in Calgary and Edmonton continued to feel the impact of lower oil prices. In Calgary, the number of commercial properties sold during
the first two quarters of the year was down 12 per cent from the same period in 2015.  The most significant impact has been seen in office space; at the end of July 2016, the
office vacancy rate was approaching 25 per cent. 

In Edmonton, the number of commercial building and land sales was down eight per cent year-over-year while the value of those sales was down five per cent. This marks the
second consecutive year that total sales valued less than $1 billion by mid-year. Land sales declined by 40 per cent year-over-year, indicative of a slowing economy; however, the
total dollar value of building sales was up 13 per cent compared with the first half of 2015.  There continues to be demand for good quality product in the Calgary and Edmonton
markets, though a full recovery is not expected until oil prices rebound. There will likely be some good opportunities for investors coming on to the market later this year and
next year as owners start to sell off assets.

2016 Market Overview

5 May 2017

Courtesy of The Network!!

This report provides a general synopsis of overall sales activity observed within the City of Edmonton during 2016, with a 5 year summary also being presented to assist in gauging activity in 2016 in relation to the preceding 4 years. The Market Overview will key on overall sales activity and trends within the City of Edmonton as well as analysis of a number of sub-sectors.

2016 Rental Market Report

28 March 2017

Courtesy of CMHC

Edmonton's vacancy rate in 2016 drives up. Job losses and lowered migration have slowed the demand for housing.

Aspen Plaza Broker Open House

3 January 2018

Wednesday, July 4 2018 we invite interested parties to attend our broker open house at Aspen Plaza. Full details can be viewed in the PDF invitation.