It’s data day here at EdmontonCommercial.com, and today we’re focusing on industrial land sales in 2019.
Year-to-date, 15 Industrial land parcels have sold in the Greater Edmonton region, broken down as follows:
10 land parcels in Edmonton proper at an average price of $693,000 / acre
3 land parcels in Leduc / Nisku sold at an average price of $498,000 / acre
1 land parcel in Acheson sold for $480,000 / acre
1 land parcel in Sherwood Park sold for $725,000 / acre
Now let’s contrast that to the industrial land currently being marketed for sale:
24 land parcels available in Edmonton at an average asking price of $750,000 / acre
33 land parcels available in Leduc / Nisku at an average asking price of $604,000 / acre
15 land parcels available in Parkland County (including Acheson) at an average asking price of $421,000 / acre
6 land parcels available in Strathcona County (including Sherwood Park) at an average asking price of $611,000 / acre
So what does all this data mean?
Here are our general observations:
1. Based on the limited amount of land sales in general, we aren’t expect a lot of new development in 2019.
2. There have only been 3 sales in Leduc / Nisku, compared to 33 options being marketed for sale. The actual sales prices were also 20% under what the current average asking price is. At the rate land has been selling this year, it could take awhile to work through all that inventory.
3. One buyer valued Sherwood Park higher than the average land buyer in Edmonton. However, one single sale does not necessarily suggest that land in Sherwood Park is more expensive, particularly when comparing the average asking prices between the two.
4. We also found it interesting that there are more industrial land parcels for sale in Leduc / Nisku than in Edmonton. When comparing the actual amount of land for sale, however, there are 452 acres available in Edmonton compared to 380 in Leduc / Nisku.
Ultimately, while this data indicates some high level information, there are still a number of questions that any land buyer or seller would want to flush out:
1. Are these parcels serviced to municipal standards (water, sewer, power), or are they on a well, cistern or septic system (like much of Winterburn is)?
2. Are there any associated offsite development levies, and how do they compare to other areas?
3. What is the shape of the parcel and how does it affect the proposed development?
4. Are there any restrictive covenants on the land? Some developers have strict requirements on what can be built and sometimes even a time limit on when a development must occur.
5. Are there any utility right-of-ways which restrict where a property can be built?
6. What is the quality and condition of the land? One might assume the land itself is adequate to handle a development, but only a geotechnical report will indicate the soil conditions and what is indeed feasible.
7. Has the land been graded, or gravel compacted, or fenced?
8. What is the zoning of the land? While we’re discussing industrial land in general, most municipalities have sub-categories for industrial, each with a unique and specific set of permitted and discretionary uses.
9. Does the land offer any exposure to main roads or is it tucked away in an industrial park?
10. What are the tax rates for the area, and how do they compare to other municipalities? As land development in Edmonton continues expanding towards city limits, companies and developers may have considerable savings by literally moving to the other side of the street.
Phew, that’s a lot of questions!
In short, knowing the average land prices (for both recently sold and currently available) is a good first step. The key is that it’s the first step of many as there’s a lot of due diligence required to ensure it’s really an apples-to-apples comparison.
The Network, CoStar Realty Information
While we have made best efforts to track every sale so far in 2019, there may be additional sales that haven’t transferred title, or not yet been researched. We have gathered the data above from sources we deemed reliable, but it is not warranted to be so.
For our analysis, we excluded a small 0.17 acre sale in north Edmonton ($350,000) and a 2.11 acre sale in Morinville ($370,000). We also did not take into account any future industrial land (ie/ currently zoned agricultural but slated for re-zoning). We also rounded down to the nearest $1,000.
In each of these respective markets, there are additional land parcels currently advertised at “market prices”. We have excluded these from the list.
As a general rule, the farther outside of a city limits, the more expensive it is to bring services to the property. Accordingly, we have removed some of the outliers that are priced significantly below the average price.
Chad GriffithsPartner, SIOR, CCIM
Chad is a partner with NAI Commercial Real Estate and focuses on the Greater Edmonton area. Chad entered the industry in 2004 and has completed over 400 commercial transactions with clients ranging from small, local companies to large institutional owners. Chad has been a top 15 producer with NAI Canada-wide since 2013.
Ryan BrownPartner, BCom, SIOR
Ryan is a partner with NAI Commercial Real Estate in Edmonton and is currently ranked nationally as one of NAI's top advisors. Having executed in excess of $100 Million worth of sales transactions and over 2 Million square feet of lease transactions, Ryan has developed a firm understanding of asset evaluation and an aptitude for building design, functionality, and long-term practicality.
Darcie is a licensed Commercial Real Estate Agent in the Province of Alberta with a focus on the Edmonton market and its surrounding areas. Darcie accomplishes custom solutions for her clients through her personable nature and results driven attitude. Darcie can help if you are looking to invest in commercial real estate or are looking for representation for a sale or lease transactions.
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