A Prosperous 2012

A RealNet Canada Inc. report says Calgary’s 2012 commercial market saw an 80 per cent increase in investment compared to 2011.

Throughout 2012, the city saw 445 transactions over $1 million for a total of $4.84 billion.

“The strength of the recovery in the Calgary commercial real estate market accelerated greatly in 2012,” said Paul Richter, director, research, RealNet Canada Inc. “After lagging behind the recovery strength of other Canadian markets, Calgary has now also reached near high levels of investments.”

The city saw especially significant year-over-year growth in the apartment and land markets in 2012. Land markets recorded $1.335 billion in value, with growth in residential land seeing a 349 per cent increase compared to 2011. Of that residential land increase, 33 per cent was attributed to two northeast sites in the city — Mattamy Homes acquiring 208 hectares and Walton Development acquiring 405 hectares.

The apartment sector closed the year with $468.4 million in transaction value, a 254 per cent improvement compared to 2011 — the third best year on record.

Within 2012, the fourth quarter of the year was the strongest, recording the third best quarter ever and the top fourth quarter ever.

“Both the industrial and office markets surged from (the third quarter),” said the report. “The industrial market posted a record for quarterly activity; $302.8 million in transaction value and the first tie in excess of $250 million.”

The report attributes office market gains to three key asset transactions ranging from $98.2 million to $120.5 million: Keynote Urban Village, The Standard Life Tower and 520 Fifth Avenue SW contributed 75 per cent of investment totals in the fourth quarter.

Calgary’s bustling commercial market is reflected in tightening vacancy rates expected to hit 3.7 per cent by the end of the year.

“According to the latest 2013 forecast from Avison Young, a commercial real estate services company, Calgary will have the lowest office vacancy rate in Canada this year,” said Todd Hirsch, senior economist, ATB Financial.

Hirsch explained a low office vacancy rate such as that found in Calgary can be both positive and negative. The positives being it suggests a vibrant, growing economy with corporate offices expanding or moving to the city as well as the potential for spurring further building and construction activity.

“But there are drawbacks too,” he said. “Companies are likely to find little negotiating room with landlords and rent may escalate. Calgary is already one of the most expensive cities in North America for office space and the low vacancy rate could push rental costs even higher.”

Hirsch added, the high rents and low vacancies could see companies opting to set up shop in centres such as Lethbridge and Edmonton instead of Calgary.

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