In its spring and summer newsletter, Avison Young said Calgary’s commercial real estate sector remains resilient despite “growing concerns” about Alberta’s future economy.
With the energy sector remaining cautious about weakening oil prices and the uncertainty surrounding the Keystone XL and Northern pipelines, as well as Alberta recording a sixth consecutive deficit this year, the newsletter says economic growth remains “decidedly positive”.
“Economic strength and resilience have bolstered Calgary’s commercial real estate industry in recent years. During the financial crisis that emerged in 2008, some commercial developers made the surprise decision to continue construction on a pre-recession schedule,” said the newsletter. “In fact, Eighth Avenue Place was announced with no preleasing commitments. In total, nine new office towers that were developed that were subsequently 67 per cent preleased and contained six million sq. ft. of space. Today, these same buildings have a cumulative vacancy of 0.58 per cent.”
Located between Eighth and Ninth Avenue and Fourth and Fifth Street, Eighth Avenue Place started with a single glass tower with the construction of a second nearing completion. The two towers provide more than 1.8 million sq. ft. to the city’s commercial space.
The Avison Young newsletter states the industrial market will introduce 3.6 million sq. ft. of new space in Calgary this year with demand remaining high due to the city’s growing reputation as a “central distribution hub in Western Canada”.
“Despite recent setbacks, Calgary’s economy is expected to remain strong,” said the newsletter. “The energy sector is poised to continue to drive economic success and will be complemented by population growth, job creation and rising consumer spending. The commercial real estate market will be a direct beneficiary as Calgary continues to enhance its reputation as one of the fastest growing metropolitan areas in Canada.”
At 4.5 per cent, Alberta’s unemployment rate is the second lowest in Canada. With the continued addition of jobs in the province people are making the move to call Alberta home. According to the 2012 Civic Census, net migration to the city was 19,658 in 2012, levels similar to numbers seen in 2007.
“Last month the province gained a whopping 18,600 new jobs, the second highest monthly increase over the last two years. It follows an almost equally strong gain in April,” said Todd Hirsch, ATB Financial’s chief economist. “Nationally, Canada’s job report also raised eyebrows with an astounding gain of 95,000. The consensus expectation was for an increase of only 20,000.”