Edmonton and Calgary have a healthy rivalry, but it’s important to note how similar the two economies are. As we have written about extensively, Edmonton’s economy is positively correlated to the price of oil, so it should be of little surprise to see how similar Calgary’s market has responded to the collapse of oil prices in 2014 (and the subsequent recovery in 2018).
INDUSTRIAL LEASE RATES
|2018 (Q1): $9.63 psf||2018 (Q1): $9.16 psf|
|(down 4.5% year-over-year)||(down 5.5% year-over-year)|
INDUSTRIAL VACANCY RATES
|2018 (April): 5.9%||2018 (April): 5.5%|
|2017 (April): 7.0%||2017 (April): 7.9%|
OFFICE LEASE RATES
|2018 (Q1): $17.26 psf||2018 (Q1): $16.91 psf|
|(down 10.1% year-over-year)||(down 11.3% year-over-year)|
OFFICE VACANCY RATES
|2018 (April): 10.1%||2018 (April): 15.4%|
|2017 (April): 11.6%||2017 (April): 15.0%|
RETAIL LEASE RATES
|2018 (Q1): $22.28 psf||2018 (Q1): $26.13 psf|
|(up 5.0% year-over-year)||(up 4.4% year-over-year)|
RETAIL VACANCY RATES
|2018 (April): 3.8%||2018 (April): 2.8%|
|2017 (April): 3.6%||2017 (April): 2.6%|
As we wrote about last week, oil prices have increased 70% from the low 2017. We anticipate oil prices continuing to hover around $70 / barrel for the foreseeable future, which should (in theory) translate to increasing prices over the next twelve months. However, there is more supply coming onto the market, so an increase in prices will be tempered unless we see a corresponding rise in absorption1.
1The threats we see to positive absorption (and the economy in general) are as follows:
- Capital fleeing a politically unstable country;
- Property taxes rising 4x faster than the rate of inflation;
- Rapidly increasing minimum wage;
- Provincial carbon tax;
- Heavy crude discount (differential between WIT and Western Canadian Select).
Information has been obtained from sources deemed reliable but is not warranted to be so. View full disclaimer here.
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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