Avenue Living buys Calgary rental portfolio for $138 million

Western Investor Staff
Western Investor

Portfolio includes three properties with 764 rental units on a total of 28 acres

Shown: Woodlands Manor, Calgary. JLL Canada, Edmonton, for Western Investor

Property type: Multi-family rental portfolio

Locations:3805 Marlborough Drive NE,  2120 Southland Drive SW, and 1825 Woodview Drive SW Calgary, Alberta.

Number of units: 764

Size of land: 28 acres (total)

Sale price: $138 million

Date of sale; March 7, 2022

Buyer: Avenue Living Group, Calgary

Brokerage: JLL multi-family team, Edmonton

Brokers: Michael Betsalel and Samuel Dean with sales associates Hayley Buskas and Tyler Herder  

 

© 2022 Western Investor

Hotel action moves back to Metro markets as pandemic wanes

Frank O’ Brien
Western Investor

Smaller hotels and motels in B.C. outlier markets had outperformed occupancy rates of urban flags that rely on corporate and tourism trade, but times are changing

 Peterson Group and Coromandel Properties are planning a new hotel in Vancouver’s Oakridge area as the hospitality industry emerges from the pandemic. | Submitted

This March, Coast Hotels brought two Peace River hotels, the 63-room former Pomeroy Inn in Grimshaw Alberta, and the 72-room Lakeview Inn in Fort St. John, B.C., under its banner, an indication of the interest in smaller properties and secondary markets that maintained the hospitality sector throughout much of the pandemic.

Okanagan, B.C., hotels, for example, were setting record levels for room revenues during the early summer of last year, but forest fires and then heavy flooding cratered the market. Room revenue data from the provincial government showed $22.1 million worth of hotel rooms were booked in Kelowna alone in the month of July, by far the biggest month ever for the local hotel sector.

But room revenues in Kelowna in August fell to $16.6 million, a level roughly typical for the past five years as guests increasingly avoid the region during peak wildfire season.

In the South Okanagan, Penticton and Osoyoos saw a similar trend. In Penticton, July posted $8.1 million in bookings, also a high-water mark for the community, before falling to $6 million in August.

Penticton opened a new hotel in July 2020, the 98-room Fairfield by Marriott, part of building surge that year that saw the addition of a total of 364 hotel rooms in Kelowna at the new Hampton Inn & Suites at the Kelowna Airport, Hyatt Place Kelowna and Microtel Inn & Suites, even as the pandemic was raging.

But, with the easing of COVID-19 restrictions, analysts expect sales and construction of of upscale urban properties to begin ramping up in 2022.

“The national forecast expects full-year occupancy in 2022 to be 60 per cent and the average daily room rate (ADR) to reach $156 resulting in revenue per available room (RevPAR) of $93, up 61 per cent on 2021,” said Laura Baxter, director of hospitality analytics, Canada, for CoStar Group.

The momentum for major hotel transactions began in late 2021, according to Avison Young.

Hotel transaction volume in Canada’s six largest markets was $712 million last year, Avison Young reported.  That was up 124 per cent from 2020 and exceeds the 2019 total – prior to the onset of the COVID-19 pandemic.

“Traditionally, the majority of hotel transactions that do occur are smaller, but they stand out more [in 2021] simply because there were so few larger transactions of $25 million plus,” Avison Young principal Curtis Gallagher told the Real Estate News Exchange.

Carrie Russell, senior manager at hotel industry consultancy HVS International, does not expect Canadian hotel revenues to fully recover to pre-COVID levels for at least two years.

“In 2019 RevPAR was $107, and in 2021 it was $56, so just over 50 per cent of the peak number,” Russell noted in a March 8 email to Western Investor.

“This year we expect a 44 per cent increase in RevPAR to almost $80 with continued recovery until 2024 when it has fully recovered.  Since the health restrictions have started to lift across the country, we are seeing booking activity increase and hoteliers are optimistic about performance in the spring and summer with a return of sporting events, meetings and social gatherings.  Corporate travel is also starting to resume, albeit at a very moderate pace right now,” she added.

Last year, Vancouver posted the strongest performance metrics, with a 48 per cent occupancy, $156.35 average daily rate and $77.65 RevPAR, while Edmonton reported the lowest ADR and RevPAR figures with $103.80 and $37.16, respectively, Avison Young reported.

Gallagher believes all revenue numbers in major Canadian cities will be higher this year than in 2021.

He thinks Calgary and Edmonton might perform surprisingly well owing to increases in oil prices, which were trading in the US$100 per-barrel range in March.

Colliers, in its 2022 Canadian Hotel Investment Report states, “The recovery is underway but will be a journey” The agency notes there is pent-up demand for travel, particularly for leisure, and leisure/business travel.

After near-zero construction of new hotels in Metro Vancouver over the past three years, there are signs of new hotels being built.

On March 4 Peterson Group and Coromandel Properties announced they had bought a 0.73-acre site in Vancouver’s Oakridge area for a joint-venture new hotel as part of a residential complex.

Landa Global Properties announced last June it plans a major hotel as a keystone of a mixed-use development on a 3.5-acre site near Richmond’s Oval Village waterfront.

Meanwhile, developer Marcon and QuadReal Properties have released plans for a 150-room hotel “comparable to a Hilton or Marriott,” as part of a large mixed-use proposal in Coquitlam Town Centre on Pinetree Way and Lougheed Highway.

 

© 2022 Western Investor

Developers are ready, willing and eager to build

Richard Lyall
Canadian Real Estate Wealth

Ontario’s housing crisis is real – and hurting us economically.

Lack of affordable housing is costing the Greater Toronto Area up to nearly $8 billion annually – or almost $38 billion over a five-year period, according to a recent report.

It affects us in other ways as well.

As a result of high prices for housing, talent is leaving our cities – and country. Young people are unable to get into the housing market and start families.

At a recent housing summit sponsored by the Residential Construction Council of Ontario (RESCON), we heard that housing prices will continue to rise.

Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board, indicated in a presentation at the summit that a resurgence of growth through immigration will continue this year and in 2023, leading to double-digit price hikes beyond 2022 mainly due to lack of listing inventory.

In 2021, there was a record level of sales activity and the average sale price of a home in the Greater Toronto Area moved above the $1-million mark.

Last year, there was a resurgence of growth driven by immigration, Mercer said, and that will continue in 2022 and 2023.

As he noted, the flip side of that is all these newcomers will need a place to live.

In light of this information, and that fact that we are in a housing crisis here in Ontario, it is ludicrous to suggest that developers would sit on approved housing projects in order to drive up prices. However, that was the inference in a staff report presented recently to Mississauga city council.

The report suggested easing building permissions won’t result in enough new homes to push down costs as staff have found that developers phase growth to manage any downward pressure on unit prices.

That claim is absurd for a number of reasons. There are myriad reasons that projects are not built immediately.

First, building a housing development is a complicated process. There is a labyrinth of approvals that must be sought. Developers may get zoning approved but it can take years before shovels go in the ground. Design plans may still have to be tweaked and building permits must be approved.

Second, any good business plans for the future. Developers must ensure they have an ample supply of land that is properly zoned, approved, and ready to build on when they are ready to proceed. Just because land for a housing project has been zoned, does not mean the venture is ready to roll.

Third, developers must ensure their operations are sustainable from year to year. They don’t build everything out in one year and then wonder what’s next. Building out all developments without planning for the future would be like a grocery store selling out its entire stock with nothing coming in.

Fourth, there are other crucial considerations that go into building a housing development such as revenue streams and availability of materials and labour. Therefore, careful, forward-thinking planning is necessary.

Developers are keen to get their projects built but are often stymied by red tape and restrictive zoning. When they do get zoning approved, it still takes time for them to begin work on housing developments.

At the recent housing summit, we heard that the federal and Ontario governments, provincial party leaders and big city mayors are aligned on the severity of the housing crisis. Importantly, all the politicians who spoke at the event agreed that urgent action must be taken to solve the problem.

This is the type of thinking that is needed to spur more housing. Developers are certainly not the problem.

Developers agree and are excited about recommendations put forward by a provincial Housing Affordability Task Force. The suggestions are a blueprint to build 1.5 million homes over the next decade.

Rest assured, developers are ready, willing and eager to build.

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at [email protected].

© 2022 Canadian Real Estate Wealth

Saskatchewan forestry sector sets a new record as growth accelerates

Matt Johnson
Western Investor

$1 billion in new capital investments lay a foundation for expansion
High prices lifted Saskatchewan’s forestry sector to a record $1.8 billion in sales last year. GENE J. PUSKAR AP
Saskatchewan’s forestry sector logged a record year in 2021, helping keep the province on track as it aims to double the industry’s growth by 2030.
According to the province, the sector saw a record $1.8 billion in forestry product sales last year, a 60-per-cent increase from $1.1 billion a year earlier.
The province attributes the growth strong prices for lumber and oriented strand board (OSB), continued growth of Asian economies and an increase in housing starts in the U.S.
“These record numbers are more great news for Saskatchewan’s economy and show we’re fully on track to achieve our goals of doubling forestry sector growth by 2030 and substantially increasing the value of our exports,” Energy and Resources Minister Bronwyn Eyre said.
The $1.8 billion number breaks the record of $1.4 billion set in 2005, according to the province. More than 75 per cent of Saskatchewan’s primary forest products are exported to other countries: 67 per cent of lumber and OSB heads to the U.S. and 100 per cent of pulp goes to Asia.
“Forestry is currently the largest sector in our province’s north, supports nearly 8,000 jobs and relies heavily on Indigenous workers and businesses,” Eyre said.
In September, the Saskatchewan government announced timber allocations to support four major forestry projects, totalling nearly $1 billion in capital investments; the projects are expected to create more than 2,600 forestry jobs.
One of the projects was One Sky Forest Products’ new $250 million facility to produce OSB. The plant is expected to make 600 million square feet of three-quarter-inch thick boards each year.
Other projects include the expansion of the Carrot River sawmill, upgrades to facilitate increased lumber production at the Big River sawmill, and the reopening of the Prince Albert pulp mill. The province has seven large primary forest product facilities producing lumber, OSB and pulp. 
According to the government, approximately 210 businesses produce a variety of primary and secondary forest products, and more than 230 supply chain businesses provide goods and services that support primary forest product manufacturers.
Meadow Lake’s NorSask Forest Products is one of those 210 companies; the government says it’s the largest 100 per cent First Nations-owned forest product mill in Canada.
According to the province, Indigenous people comprise more than 27 per cent of Saskatchewan’s total forestry sector workforce. This is the highest percentage of any province.
Thirty per cent of the Saskatchewan timber supply is allocated to Indigenous businesses, also the highest percentage of any province.

© 2022 Western Investor

Alberta housing market – whats happening in 2022?

Fergal McAlinden
other

Housing and mortgage activity in the province has remained elevated. Will that continue?

 If a slowdown of sorts was expected in the housing market after the barnstorming activity of the past two years, that certainly hasn’t transpired in Alberta.

The province saw residential property sales hit a 26.6% year-over-year spike in January, according to the Alberta Real Estate Association (AREA), with the average home price rising by 10% over the previous year and active listings plummeting.

That performance has resulted in an exceptionally tight market across Alberta, AREA said, that’s seen months of inventory (the amount of time it would take for supply to run out at current activity levels) fall to just 2.77 months.

Kristy-Lynn Maxwell (pictured top), Western Canada director for the VERICO network, told Canadian Mortgage Professional that much of the sales activity in the province had been spurred by buyers and investors from elsewhere in Canada who had been enticed by Alberta’s relatively low prices compared with the rest of the country.

“Speaking for Alberta, we’re seeing a major increase in money coming in from British Columbia and Ontario,” she said. “With our market remaining one of the most affordable, there has been a substantial increase in not only out-of-province investors, but those looking to relocate as well.”

Indeed, while it boasts two of the five largest cities in Canada by population, Alberta’s average house prices are a fraction of the ever-surging figures witnessed in the country’s hottest markets.

The average price of a home in Calgary rose by over 15% between February 2021 and the same month this year – but at $484,000, that current figure pales in comparison with the exorbitant averages in Toronto and Vancouver.

Read next: Avison Young completes largest Alberta commercial lease in years

In Edmonton, meanwhile, a 6.9% year-over-year change means the average price has increased from $326,400 in February 2021 to $348,900 last month, according to the Canadian Real Estate Association (CREA).

Maxwell nevertheless noted that some of the same challenges faced by agents and brokers in other parts of the country were slowly making their way to Alberta, with competition in the market beginning to tick upwards and current prices still representing a significant increase over last year.

“There seems to be a consensus across the province about what concerns them, inventory of course being at the top of the list,” she said, “but Alberta hadn’t had the same challenges as the other provinces until now.

“We’re dealing with increased housing pricings, multiple competing offers, fulfillment delays, and of course the concern if appraisals will meet up with the purchase price.”

The good news for the province is that standalone housing starts across Canada trended upwards in February, rising 8% from January for a total of 247,256 units. Alberta saw a significant improvement in urban housing starts, with its figure of 2,249 units representing an increase of 21.3% over the same time last year.

Single-detached units across the province increased by 8.3%, and apartment units saw a 47.3% increase compared with February 2022.

Such has been the level of interest in Albertan real estate from other parts of Canada, Maxwell said, that there had been plenty of reports of advertising in Ontario to “buy in Alberta” – both from an investment and new-build perspective.

Read more: CMHC: Housing starts continue posting month-over-month gains

“I’m not certain if that’s what has caused the increased money coming in from that region,” she said. “However, I feel it may only add fuel to the fire.”

One factor that could dull Alberta’s housing market momentum in 2022 is the prospect of interest rate increases, with the Bank of Canada having upped its trendsetting rate at the beginning of March and a number of fresh hikes anticipated before the end of the year.

The likelihood of rate increases throughout this year was one of the key reasons RBC Economics predicted that the housing market would “cool but stay strong in 2022,” in a report at the end of January.

“We expect the Bank of Canada’s rate liftoff to turn down the market’s heat in 2022 as deteriorating affordability sends buyers to the sidelines,” the bank’s senior economist Robert Hogue said.

Still, Maxwell indicated that frenzy around the most recent hike could also impel borrowers and would-be buyers to act. “I’m not sure if the interest rate itself will have the most impact, or the PR surrounding it will – creating a sense of urgency for homeowners and buyers alike,” she said.

“With values increasing at such an unfamiliar pace, renewals, rentals and purchases are all benefiting from the hype surrounding rates.”

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Greater Vancouver could see over 4,100 new construction condo units launch in Q1-2022

Michelle McNally
Livabl

Greater Vancouver is on track to see more than 4,100 new construction condo apartments launch sales by the end of Q1-2022, significantly more than what was reported during the same business quarter last year.

Jasmine Cracknell-Young, vice president of advisory for Canada at Zonda Urban, told Livabl that approximately 4,143 new condo units and 23 projects are projected to launch this quarter in Greater Vancouver. So far, there have been 15 project launches with 2,832 units in Q1-2022. By the end of the month, rounding off the first quarter of 2022, there could be an additional eight development launches, bringing to market another 1,311 new condos.

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By comparison, 14 new home launches with 2,358 units took place in Q1-2021 across the region, a bit over half of the developments that are expected to have kicked off by the end of Q1-2022.

As developers bring new product online, it appears that this quarter is looking to build off of “the banner Q4-2021,” that Vancouver experienced, Cracknell-Young explained.

“Many developers are launching now because of the incredible momentum in the market,” she said. “Across the country, we continue to see red-hot housing markets as demand continues to outstrip supply.”

Vancouver suburbs see surge of activity in Q1-2022

Demand for new homes in Greater Vancouver has been extremely strong, Cracknell-Young says.

New home projects in the region have been selling 60 per cent to 100 per cent of units within a month. Overall absorptions for new concrete condominiums is currently 173.3 units per month, while wood frame projects are averaging 51 condos a month. Compared to last year, concrete developments were selling at an average rate of 18.2 units a month and 8.5 suites per month for wood frame developments back in Q1-2021.

When it comes to launch activity, Cracknell-Young explains that Vancouver’s downtown core has been fairly quiet in regards to new launches. Most of the project launches this quarter have been taking place south of the Fraser in areas like the Cambie Corridor, which is “still very hot.”

The bulk of the action has been found in Vancouver’s suburban areas. Communities such as Langley, Burnaby and Surrey have been active thanks to transit initiatives, the ongoing build-out of master-planned communities and lower price points relative to more inner-city neighbourhoods.

Heading into Q2-2022 and the remainder of the year, Cracknell-Young says that she is “cautiously optimistic,” of what’s to come.

“I believe that demand in the market will remain strong, but that could be tempered by any number of outside factors like the conflict in Ukraine, oil prices or rising interest rates,” she said.

In a quarterly Metro Vancouver Multi-Family Take published earlier this month, Zonda Urban stated that there were 26,291 new home sales in all of 2021, a number that shatters the previous annual total sales record set in 2016 by 30 per cent. Inflation pressures on construction labour and materials, in addition to higher costs for regulations and code requirements, are expected to place more pressure on prices in 2022, the report said.

 

© 2020 BuzzBuzzHome Corp.

Dawson Creek real estate on fire as 2022 begins

David Lueneberg
Western Investor

Agents seeing a surge in residents moving from Metro Vancouver to Dawson Creek looking to find work in gas patch.

 Six-bedroom old-timer on 102 Avenue, Dawson Creek, zoned RM-2, listed March 17 for $174,000.| REW.ca / Royal LePage Aspire.

Dawson Creek’s residential real estate market saw one of its best years ever last year, and many expect sales to continue steady well into 2022 as the province’s post-pandemic recovery and B.C.’s nascent liquefied natural gas (LNG) industry gather steam. Dawson Creek is close to the main LNG wellhead in the Montney Basin. 

“It was the best year we ever had…by 20 per cent,” said Kevin Kurjata of Royal LePage Aspire Realty in Dawson Creek, B.C.

In fact, you would need to go back to 2012 to see numbers that would challenge 2021’s figures.

Kurjata believes several factors led to higher home sales in 2021. Many of them were associated, ironically, with the pandemic.

“There were some financial things with COVID that put some people in the market that weren’t in before,” said Kurjata. “People were able to suspend their rent or mortgage for six months or had CERB payments coming in.”

Spending on travel and other experiences was curtailed as people spent more time at home, resulting in people building up their savings for other purchases.

Blaine Nicholson with Remax Dawson Creek agrees with Kurjata’s assessment.

“2021 was a great market. Close to a record market in residential real estate sales,” said Nicholson, who feels pent-up demand among buyers spurred the market higher. “People would see that their neighbour’s house sold so they would put their house on the market. It would sell, and it would carry on from there.”

With families growing in the city, many of Nicholson’s clients are looking at getting into bigger homes.

“Three bedrooms with a basement, hopefully with a garage, much more affordable than a home down on the Lower Mainland or even the Okanagan,” he said.

The average selling price for a single-family home in Mile Zero last year was just over $350,500. Current Dawson Creek listings in Rew.ca include detached houses priced much lower. By contrast, the benchmark price for a single-family house in the Lower Mainland in December was $1.8 million.

Nevertheless, residential prices posted strong gains. According to the B.C. Real Estate Association, residential prices increased 30 per cent in the South Peace last year, double the 15 per cent gain recorded in Greater Vancouver.

Kurjata said the South Peace could see a shift in 2022 based on global events such as the conflict in Ukraine.

He points out that the region is more influenced by what happens in Alberta than events in B.C. A good economy in Alberta, where the energy sector is a major factor, translates to a better market in the Peace Country.

Some realtors are already starting to notice the effects.

Nicholson said he’s seeing a surge in residents moving from Metro Vancouver to Dawson Creek looking to find work in the oil and gas patch. He notes this is very unusual and has never happened before.

“People are able to sell something in the Lower Mainland, come out with a pile of cash in their hand, purchase a home here, better than what they had, it’s mortgage free, and they still have cash in the bank,” he said.

Kurjata predicts sales should remain steady through this year as a trend that started in late 2021 remains in play.

“We should see significant price appreciation,” added Kurjata. “I mean, if we do 80 per cent of what we had last year, we’ll have an excellent year. “

Based on early figures, Kurjata said residential prices could reach as high as $390,000 by the end of the year – a new record for the region.

Looking further ahead, Nicholson believes getting the Coastal GasLink pipeline into operation will also have a huge impact on the area’s market.

“It’s so big that it’s going to take an amazing amount of natural gas to get in that pipeline,” said Nicholson. “That natural gas is coming from underneath our feet. So, if we’re busy right now, and we don’t have the LNG flowing to the coast, it only makes sense that we’ll get even busier (when it does).”

 

© 2022 Western Investor

Redevelopment site in the heart of Saanich sells for just under $20 million

Andrew Duffy
Western Investor

Saanich has identified the area surrounding the site as its municipal core

Cloverdale Avenue in Saanich. GOOGLE STREET VIEW

A prime site in the heart of Saanich has been snapped up for just under $20 million.

Commercial real estate firm CBRE said a development site bordered by Blanshard Street, Cloverdale Avenue and Oak Street has been purchased with an eye to redevelopment.

The exact purchase price and name of the buyer have not been disclosed.

Ross Marshall, vice-president with CBRE Victoria’s Investment Properties Group, said there was a lot of interest in the site because of the potential for redevelopment. Saanich is pushing for that area to become the heart of the municipality, making it a location with a promising future.

He said the sale was conducted through a bidding process that garnered a number of offers, with the selling price hitting just under $20 million.

Marshall said being in the heart of the Douglas-Uptown corridor, having a motivated municipality in the mix and the fact there is income from fully tenanted businesses currently on the site drove the offer process.

“So there was holding income, which on some of the development sites is often not the case,” he said.

The site, with the addresses 3311 Oak St. and 816 Cloverdale Ave., is 1.45 acres with three fully tenanted industrial buildings. Two of the buildings are on 3311 Oak St. and were built in 1968, while the third building was built in 1964 on Cloverdale.

The site is right in the middle of the 383-acre Douglas-Uptown area, which the District of Saanich has highlighted as the heart of the municipality.

The district has said it would like to see an increase in diverse housing, employment, transit, green spaces and amenities sprout up in the area over the next two decades.

The area, bordered by Victoria at Tolmie Avenue to the south, Huxley Street just north of the municipal hall on the north side, between Burnside and Harriet roads on the west, and Leslie Drive and Calumet Avenue on the east, is home to about 4,400 residents and 10,000 workers.

In its vision for the area, Saanich has suggested mid-to-high-rise towers of up to 24 storeys, ensuring homes are located near transportation options, services and amenities.

 

© 2022 Western Investor

Coquitlam’s real estate arm plans more condos around Burke Mountain Village

Janis Cleugh
Western Investor

The city is proposing additional multifamily development around a future commercial and social hub

 Coquitlam is seeking permission to increase the density of the residential neighbourhood surrounding its yet-to-be-built commercial and social hub on Burke Mountain.

The city’s land and real estate division will host information sessions March 18 and March 21 for the public to learn more about the extra density proposed around Burke Mountain Village. The public will also be able to ask questions about the proposal.

The application, which is set to come before city council this spring, calls for a change in the citywide Official Community Plan, as well as rezoning and subdivisions, for some of the city-owned lands closest to the Village.

Once built in the Partington Creek Neighbourhood, the Village will be the only major shopping district for the entire northeast region, where the municipality plans to house 50,000 residents. 

The Village itself will have 120,000 sq. ft. of retail space plus the 80,000 sq. ft. North East Community Centre and about 2,000 residents.

Curtis Scott, Coquitlam’s director of land development, told the Tri-City News on March 15 that the new plan is for more apartment units — not just townhouses — on the outside edge, across from the street and Village.

The proposed housing uptick, he said, is to make up for the land use at current townhouse sites on Burke Mountain. 

“We’re noticing that townhouse developments on the mountain are not achieving their full density,” he said, adding the proposed apartment complexes around the Village would be wood-framed, if approved.

“We want to make-up ground and ensure that we have a population close to the Village, with a mix of housing types.”

Scott said with higher growth on the outskirts of the Village, in taller buildings, it will free up space for public parks in the vicinity, boosting them from 1.8 acres to 4.6 acres.

As well, under its land use application, more environmental measures will be placed around Baycrest Creek, he said, and trails added to link with the Village.

Should the bid be OK’d by council, the city intends to service the land and put it on the market. 

Of the 100 acres in the Partington Creek Neighbourhood that are owned by the municipality, about 60 acres remain — including the 39 acres in the Village, Scott said.

 

© 2022 Western Investor

Calgary 764-unit,three-complex rental portfolio sells for $138 million

Frank O’Brien
Western Investor

 Alberta real estate agents see investor uptick as oil price bounces near US$100 per barrel

Avenue Living purchased 764 rental in Calgary’s biggest multi-family deal so far this year. | Avenue Living

Toronto-based Michael  Betsalel of Jll Canada suggests the sudden surge in Alberta’s residential and multi-family market is not tied to the increase in oil prices.

Real estate decisions aren’t made immediately on the fluctuations in resource prices,  Betsalel, executive vice-president of JLL national multi-family team said March 7, just as his team closed on a $138 million portfolio sale of 764 Calgary rental apartments.

The global price of oil dipped to around US$94 per barrel March 15 – the highest level in eight years – after soaring to more than US$100 in recent weeks.

“Real estate sales don’t go up right away. There is a lag between economic changes and the market,” he said.

Apparently, many homebuyers and investors in Canada’s major oil-producing province had a different reaction as oil prices began to ascend this year.

On January 6, the price of West Texas Intermediate, an industry benchmark, had reached a seven-year high of US$79.46 per barrel. By February 28, when it topped US$91, Calgary housing sales had exploded 80 per cent from a month earlier to set the highest February sales record in the city’s history.

Edmonton housing sales had jumped nearly 70 per cent month-over-month.

JLL’s single portfolio sale in early March, as oil traded at US$107, was equal to one-third of Calgary’s entire multi-family sales volume in all of 2021.

“Alberta has been a no-fly zone for investors,”  Betsalel conceded “But that has changed.”

The head of Alberta-based Avenue Living, which bought the three-building rental portfolio, has no illusions about the impact of oil prices on the Alberta economy.

“Tailwinds are emerging with rising oil prices, and investors and businesses are again seeing the advantage of investing in Alberta,” said Anthony Giuffre, founder and CEO, Avenue Living.

“The energy industry, combined with Alberta’s emerging technology hub, its cleantech leadership, and increasing global exports, creates an environment to give Alberta some well-earned attention from the investment community,” he added.

The tailwinds are raising investor interest in Alberta from across Canada, according to Samuel Dean of JLL’s multi-family team in Edmonton. “Our inbound call volume is tremendous,” he said.

Institutional investors are looking at new concrete product, such as the Augustana, a purpose-built luxury rental tower in downtown Edmonton which JLL has just listed, he noted, and at suburban land with the potential of development.

The Network, which tracks the Alberta commercial real estate market, shared information on eight of the largest pending deals this year in Calgary: six of the transactions involved out-of-province buyers, from Metro Vancouver, Victoria, Greater Toronto and Halifax.

In Red Deer, halfway between Calgary and Edmonton, the developers behind the 91-acre Capstone community, which is restricted to multi-family development, are also buoyed by the surge in oil prices. There is growing interest in the master-planned, riverfront community, where an acre of serviced land starts at $750,000, according to Susan Veres, head of Capstone marketing.

“There is a buzz now right across Alberta,” said Veres, who noted that land and real estate prices in Alberta are still a fraction of that in B.C. A typical home price in Red Deer, for instance is $340,000, compared to $1.3 million in Greater Vancouver and Greater Toronto, or the national average home price of $816,700.

 

© 2022 Western Investor