EDMONTON – New data from Altus Group shows signs of commercial real estate market recovery in Calgary while Edmonton continues to struggle.
Altus looked at the first quarter of 2021 rebound activity in Calgary and Edmonton’s commercial real estate markets, noting the cities are emerging out of a challenging 2020.
In Calgary a total of 162 transactions were recorded in Q1 2021, adding up to $910 million. This is a 22 per cent increase from Q1 2020.
“While certain sectors such as industrial and land have shown relative strength and remain favourable, activity has stemmed predominantly from local capital,” stated Altus Group in its report.
The strongest performing sector was the land sector with ICI and residential land transactions making up 46 per cent of the investment total for the quarter. Retail also had a strong showing in Q1 2021, with 28 transactions totalling $141 million, nearly tripling in value compared to Q1 of last year. Altus group noted the industrial market has remained a relatively consistent performer with 48 transactions totalling $195 million, roughly on par compared to its performance in Q1 2020 but increasing 49 per cent compared to Q4 2020.
Calgary’s office sector saw only six transactions for a total of $29 million in Q1 2021, an 80 per cent decrease from this time last year.
“Even as investors have learned to navigate and reassess risk in this new investment environment, large institutional investors have remained tepid towards Calgary under current conditions,” stated the report.
There were fewer rosy spots in Edmonton.
A total of 126 transactions were recorded in Q1 2O21, totalling $584 million and amounting to a 45 per cent decrease compared to Q1 2020.
“Edmonton lags behind as it continues to face economic challenges that are compounded by ongoing pandemic-related challenges,” explained Altus Group researchers. “However, there are some positives to draw on the number of people being vaccinated is increasing throughout the province and discussions have shifted towards the reopening of the economy.”
Much of the city’s activity in Q1 2021 was attributed to the industrial, multi-family and land sectors. Together the improved asset classes of industrial and apartment contributed to nearly 47 per cent of all activity, while the ICI and residential land asset classes contributed 36 per cent. Most of these sectors showed year-over-year increases when compared to Q1 of 2020:
The industrial sector recorded 40 transactions worth $157 million, an improvement of 15 per cent compared to the same time last year.
The apartment sector saw 15 transactions, totalling $116 million. Although this amounts to a drop of 78 per cent from Q1 2020, the sector has seen increases in each quarter since a record low was seen in Q2 of 2020.
Altus’ research showed that retail has yet to show signs of recovery with Q1 2021 recording 16 transactions totalling $42 million, a 63 per cent decrease from last year.
The office sector has continued to fluctuate throughout the past year, evident in Q1 2021 with 11 transactions recorded for a total of $48 million, a 61 per cent drop from the previous quarter, but a 180 per cent increase from the same time last year.