Industrial real estate market hopes to maintain momentum in 2018
When it comes to the Calgary commercial real estate market, downtown office space grabs all the headlines.
Just like in sports, where star players occupy the limelight and grinders are often overlooked, the struggles of the downtown office market continue to dominate discussions of commercial real estate, while the industrial sector has quietly weathered the economic storm over the past three years.
Calgary’s commercial real estate market could be poised for a rebound in 2018
All eyes will be on Calgary’s commercial real estate market this year, with hopes that the downtown office sector, which continued to struggle in 2017, will rebound in 2018.
The office market has grabbed everyone’s attention over the past three years, as vacancy rates have soared to historically high levels following the collapse of oil prices and the subsequent waves of layoffs that ravaged employment ranks in downtown Calgary. Thousands of people were cut loose, and a vast amount of office space suddenly became vacant in the downtown core.
New HQ or not, e-commerce giant’s impact is already being felt
Let’s call it the “Amazon effect”: the cascading economic stimulation that comes from one of the world’s largest corporations taking up residence in your market.
It is an effect already being felt in the Calgary region after the announcement that the e-commerce giant will be opening a 600,000-square-foot distribution centre in Balzac – employing 750 full-time workers, and an additional 450 part-time or seasonally, by the end of 2018.
Commercial real estate investment represents unique set of challenges and rewards
Investing in commercial real estate could be considered the major league of real estate investment.
The skills required are greater, but so too are the potential rewards.
Greg Kwong, regional managing director for commercial real estate company CBRE in Alberta, says there is really no strict definition of commercial real estate – it can be a major office tower in downtown Calgary, a fourplex apartment building or anything in between.
Calgary’s retail market is expected to remain vibrant over the next 12 months due to an improving economy and rising consumer confidence.
A report by Colliers International in Calgary says the shopping centre vacancy rate in the city is expected to drop slightly from 3.21 per cent to three per cent while streetfront vacancy rates are expected to stabilize and hover around the current rate of 5.75 per cent.
“We are still the number one province on a per capita retail (spending) basis by a significant amount above the national average,” said Robert Walker, senior vice-president/partner with Colliers International in Calgary. “That still shows me that despite the vast number of layoffs downtown, the people who are employed are still spending money.
“Our average weekly income is still the highest in the country by a longshot. So they’re still spending money.”