Let’s do a quick flashback in time:
May 5th, 2015: Alberta’s New Democratic Party won a majority government.
May 6th, 2015: A blizzard punched Edmonton in the face.
For those who thought the past four years was the winter of discontent, there was some vindication this past week as the UCP government won in advance of what could be (literally) a glorious summer.
Before we get into the meat of this article, we want to stress that this is not a pro-UCP article. We endeavour to stay apolitical whenever possible, and to that extent we didn’t comment or write any articles on the election prior to today. We are keenly sensitive to the fact that our friends, family, neighbours, clients and colleagues all have varying political beliefs and our genuine respect for these people greatly transcends any of our own ideologies.
It should also be noted the NDP’s still carried Edmonton, with the charismatic Notley winning her riding in very convincing fashion. The rest of Alberta voted overwhelmingly in support of the UCP, but Edmonton is still painted orange.
That said, here are a few things that transpired in Alberta over the past four years:
– Provincial debt increased to $58 billion
– Minimum wage increased to $15.00 / hour
– Provincial carbon tax imposed
– No new pipelines
Back in 2015 we highlighted a few stocks that have heavy exposure to Alberta’s market place, and how they each responded to the NDP winning the election at the time.
We chose Canadian Western Bank (CWB) as a regional bank headquartered in Edmonton, Melcor Developments (MRD), a real estate developer also headquartered in Edmonton, and Canada Oil Sands (which was subsequently bought by Suncor). The comparison in stock prices over the four years tells an intriguing story:
|TSE||Company||May 7, 2015 Close||April 16, 2019 Close||% Change (Over 4 years)|
|CWB||Canadian Western Bank||$29.06||$29.12||0.21%|
Now there is no denying that these stocks – and the economy as a whole – are directly influenced by the price of oil. When the NDP’s were elected in 2015, the price of oil was roughly $60 / barrel (WTI:$USD), then dipped considerably in 2016 and has had a bumpy road to get back to the mid $60’s currently.
We have written about this extensively in the past, and we remain steadfast: the price of oil itself is the single biggest determinant for Edmonton’s commercial real estate market.
Regarding the change in government, it’s simply too early what effect it will have on the commercial real estate market. We’ll need to see how Edmonton will be impacted by being under-represented in cabinet, and hope that our city still has input on major provincial decisions.
We are, however, optimistic though that the UCP will be more business friendly, will fight to get oil to tidewater and work to attract capital that previously vacated the economy. If the UCP is successful in this regard, we would expect it to translate into higher business optimism, more investor confidence, and a corresponding increase in activity in commercial real estate activity.
In Kenney’s words in his celebration speech: “Alberta is open for business”.
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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