Sorry for the buzzfeed-style headline, but you really will be surprised by the sale price.
Before we get to that, we admit we’re unapologetically proud Edmontonians, and perhaps we’re sometimes guilty of being too optimistic. Notwithstanding all the positives, we are not naive to the challenges facing the commercial real estate market in Edmonton.
This week oil prices slipped below $45 / barrel as the US shale industry continues to produce at a level that’s disrupting the global supply and demand equation. Oil prices are now at a 7 month low, and this will undoubtedly put further pressure on companies with exposure to the energy industry. Furthermore, this could lead to an even larger provincial deficit as this year’s budget is already expected to be $10.3 billion, and this is based on the assumption that oil prices will average $55 / barrel.
The continued downward pressure on oil prices is reverberating through the commercial real estate market as well. We reported on 4 office towers that sold for shocking prices a few months ago, and another one just sold at an equally surprising price. A downtown office building, known as Highfield Place, which sold for $27,610,000 in August 2011 just sold a few weeks ago for $5,150,000. This is a roughly 80% decline in only 6 years.
Here are some more details on the transaction:
Address: 10010 – 106 Street
Size: 104,120 square feet
Vacancy (at time of sale): 74,126 square feet (71.19%)
Sale date: May 26, 2017
Sale Price: $5,150,000 (previously sold for $27,610,000 in 2011)
Price / Sq ft: $49.47 / sq ft
Tax Assessment: $13,252,000 (2017)
It’s worth noting this particular building has a considerable amount of vacancy, but this still sets an ugly precedent for future sales of downtown office buildings.
We are expecting the economy to recover for the reasons we highlighted in a number of different articles, but there are undeniably a few speed bumps on that path.
Sources: The Network – Real Estate Intelligence, Globe and Mail, Marketwatch
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