EDMONTON
Numerous large property sales during the first two quarters of 2017 contributed to a 39 per cent increase in total sales value for commercial properties year-over-year in Edmonton. The total sales value for commercial properties topped $1 billion at the mid-year point for the first time in three years in the city.
Private investors are the most active buyers in Edmonton’s commercial property market, while institutional investors have focused primarily on core retail and industrial properties. The vacancy rate for retail properties is five per cent, while the vacancy rate for industrial properties currently sits at nearly eight per cent. Retail property sales in particular continue to show strong investor interest with a total sales value during the first two quarters of the year of $331,872,034, up from the $158,933,000 in sales during the same period in 2016. Many investors are also actively reviewing land positions, indicating expectations for growth across different market segments in the future.
Total sales volume for office buildings saw a significant increase of 202 per cent year-over-year during the first half of 2017 largely due to a five-building office building portfolio sale. The vacancy rate for office space remains higher, however, than other commercial property segments, sitting at approximately 17 per cent. This is largely due to 1.8 million square feet of new office inventory entering the market downtown, as well as the major provincial office relocation to a government owned campus on the southside of the city. Increased vacancy rates have led some office space property owners to sell existing assets. This in turn has led to increased opportunities for buyers looking to add to their investment portfolios.
As the price of oil continues to stabilize, albeit at a slow pace, Edmonton’s commercial property market is expected to continue to slowly recover, leading to cautious optimism amongst investors. This optimism is also fueled by the approval of two crude export pipelines (Trans Mountain and Keystone XL), which have the potential to increase employment and significantly impact Alberta’s capital region’s economy overall.
Increased levels of activity in the energy, manufacturing and construction sectors, as well as the province’s net gain of approximately 5,500 people from all sources of migration during the second quarter of 2017, and expected GDP growth of nearly two-and-a-half per cent
for both this year and next, are all positive indicators of a healthy commercial property market heading into 2018.
About Don Cholak
