Calgary’s commercial real estate market should remain strong into 2013, states a Re/ Max report released Wednesday.
“Consumer confidence remains high, given the city’s and province’s solid economic footing, which continues to be bolstered by a robust oil sector,” said the commercial investor report. “Most segments of the market are active, with the retail, office and investment components particularly busy.”
The report, which assessed trends in nine Canadian centres, found that most markets saw an increase in commercial sales and dollar volume during the six-month period ending June 30.
The report said Canadian and foreign investors are behind the push, taking advantage of low interest rates to buy up apartment buildings and small strip malls.
“Given the appetite for tangible investments with long-term revenue streams and potential for appreciation, commercial real estate has been gaining favour and is expected to be a top-performer well into the new year,” said Elton Ash, regional executive vice-president for Re/Max of Western Canada.
Ash said demand won’t likely be met as owners and landlords hold on to their properties, given the prospect of capital gains taxes down the road. “It’s a push-pull situation, yet buyers are forging ahead, hoping to ride the wave of year-over-year double-digit equity gains a little while longer,” he said.
The report also said the office segment of Calgary’s commercial real estate market is exceptionally healthy, with downtown vacancy hovering around three per cent, while Class ‘A’ space is even tighter, running near one per cent.
“The strength has much to do with the active oilsands sector, which – with numerous projects on the go – is sparking an increase in demand for office and industrial space.
“While a growing number of organizations are establishing their corporate head offices in Calgary, many are opting to lease instead of buy in order to invest maximum capital in their operations,” said Re/Max.
The report also noted the spread of U.S. retailers and national big-box chains in the city has created “serious competition” among smaller retailers wanting to secure good locations near anchor stores.
Mario Toneguzzi, Calgary Herald
Published: Thursday, October 18, 2012