We’ve noticed a general pickup in activity to start 2017, particularly in the Nisku / Leduc and Acheson industrial areas. With oil prices stabilizing over $50 for the past 6 weeks, businesses that have previously held off on making decisions are back in the market. There has been a lot of pressure in the Nisku / Leduc and Acheson markets over the past two years so it’s encouraging to see more activity.
The following graph neatly illustrates how oil prices rose since OPEC agreed to cut production in early December:
As we appear to be riding some momentum early in the year, here are the major forces we feel will have the biggest impact on Edmonton’s commercial real estate market in 2017.
- The federal government has approved both the Trans Mountain and the Line 3 pipeline and Donald Trump recently signed a conditional approval for Keystone XL. While the pipelines will undoubtedly be a benefit for Alberta, there is still a difference between approval and implementation. We’ll be watching to see if all three go ahead;
- OPEC’s compliance with production cuts and how long it lasts. Some insiders feel there will never be full compliance, particularly when the deal hinges on Russian cooperation;
- The U.S. has the potential to make up for OPEC’s cut by increasing shale production. In other words, it could become a zero sum game in which the world markets simply rebalance.
There are many other factors that will continue to influence our market, including interest rates, the political landscape and the comparative value of the Canadian dollar. We still argue, however, that our market is hinged primarily on oil prices. While we will still report on microeconomic issues such as non-residential property taxes, we will continue to highlight how larger macroeconomic trends invariably affect the commercial real estate market in Edmonton.
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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