Weekly Market Update: May 8, 2015

The New Democratic Party and Commercial Real Estate in Edmonton

We have been asked numerous times over the past couple of days how the new government will affect the commercial real estate landscape.  While we lean towards being apolitical in commenting on the New Democratic Party, or any party for that matter, we will undoubtedly see changes that come with such a profound shift in government.  The NDP party has campaigned on a platform of higher minimum wages, higher corporate tax rates and a seemingly imminent royalty review.  While it would be a hasty conclusion to assume these changes will negatively affect the provincial economy, investors have already driven down stock prices of companies related to the Alberta economy.  We looked at three publicly traded companies with heavy exposure in Alberta and charted the closing positions on Tuesday (prior to election results) and the closing position two days later.  Melcor (real estate developers), Canadian Western Bank and Canada Oil Sands stock prices have dropped 5.07%, 3.90% and 9.04%, respectively since the NDP obtained a majority government.

 

NDP

Correlation does not imply causation, so it would be reckless to suggest that Alberta-centric stocks pulled back exclusively as a result of the NDP’s forming government.  However, we do believe many in the business community are nervous about how the NDP’s fiscal platform will affect industry.  Another large influence on our economy surrounds oil prices.  After flirting with prices in the mid $40’s from January to March, West Texas Intermediate has been hovering around $60 / bbl this week .  The increasing commodity price was starting to breathe life into a struggling economy and some fear the new government might stifle the upward trend from continuing.  We will be monitoring real estate activity, oil prices and market sentiment very closely to provide the most timely information as it relates to the interests of landlords, tenants, buyers and sellers.

NDPgraph

 

 

Our Team

Chad Griffiths

Chad Griffiths

Partner, 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 Brown

Ryan Brown

Partner, 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 Bouteiller

Darcie Bouteiller

Associate

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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