Nowadays, a renter's market has moved to a bit of a landlord's market in the Highway 2 corridor's middle point. New industrial shell space leases for $12 to $13 per square foot, and landlords aren't exactly struggling to find tenants.
Acheson cites the case of one landlord with a project on the way.
"The first 12,000-square-foot building is three-quarters leased and it's not even built," he noted.
While the price range for industrial space can still vary from $8 to $14 per square foot, prices have generally firmed up as vacancy has declined.
Powering demand is a resurgent oil and gas sector and everything that goes with it - including expansion of the huge NOVA Chemicals petrochemicals plant east of Red Deer at Joffre.
Nova announced earlier this year it wants to go ahead with what could be a $900 million expansion at Joffre, roughly 30 kilometres outside Red Deer in Lacombe County.
NOVA plant The expansion would add another polyethylene reactor to the site. Polyethylene is one of the building blocks in the manufacture of plastics. The expansion proposal would produce between 40 and 60 jobs and contractor positions at the site once work is finished in fall 2015. The construction workforce would be far more significant, with an average of 150 to 250 tradespeople on site during construction and a peak workforce of about 500 in late 2014, according to NOVA.
The project is currently in the permitting stage, with a development application before Lacombe County and applications working their way through provincial regulators. NOVA isn't looking for more water for operations, nor is it seeking a major footprint expansion, so it would seem likely the project will receive needed approvals by early next year, allowing for a 2013 construction start.
Given NOVA's plans, industrial shop space demand in Red Deer isn't likely to suddenly disappear.
Inside the city, things are also up noticeably in 2012. Building-permit values for the first four months of 2012 hit $72.8 million, up $27.4 million over the same period in 2011 or roughly 60 per cent.
The increase was evident across all four building sectors: residential, commercial, industrial and institutional. Permit values and the total number of permits were up in all four categories. Residential values accounted for just under half the total for January to April 2012.
Housing prices are also rising this year in Red Deer, according to figures from the Central Alberta Realtors Association (CARA).
CARA past-president Patrick Galesloot said things have definitely picked up in the Red Deer market, and he expects the recent growth in activity to continue on through 2012 and into 2013.
2.9 per cent vacancy
The average single-family home price in Red Deer climbed in the first five months of 2012 to $348,944, up about 6 per cent from last year.
The price hike came with a higher number of homes selling. Sales were up 21 per cent for the January to May period. Apartment condo (18 per cent) and townhouse (7 per cent) prices were also up for the start of 2012, and while fewer apartments were on the market, more were sold - about 29 per cent more.
Galesloot says there is still caution in the market, but there is also enough demand to produce lots of multiple-offer situations for sellers. The difference is those situations may have led in the past to a sale above a home's list price. For now, Galesloot says, even multiple-offer situations aren't necessarily bringing a seller his asking price or more, as they did at times prior to 2008.
Unlike many larger municipalities, Red Deer is actively involved in residential land development and not just in redevelopment zones. About one-quarter of residential land being developed in Red Deer is owned by the city
Rents in Red Deer have remained fairly stable, with the average two-bedroom apartment renting for about $822 per month in fall 2010, and only $5 more than that in fall 2011, according to Canada Mortgage and Housing Corp.
Apartment vacancy was sitting at around 2.9 per cent last fall, says the housing agency.
Power centre
While the biggest bright spots in the Red Deer market may be the industrial and residential sectors these days, things are also fairly healthy on the commercial side, not just in terms of new building activity but in terms of what rental rate properties can fetch. Red Deer power centres in the city's south end can snag in the range of $40 per square foot for annual rent, Acheson says, and other regional shopping centres aren't that far behind at $30 to $35 per square foot.
Melcor Developments is moving ahead with its Clearview Market Square project in the northeast section of the city. The 22-acre project already has several financial institutions in the fold, as well as a grocery tenant and Shoppers Drug Mart on the way.
If there's a sector of the real estate market that's struggling in Red Deer, it's the office market downtown. Acheson says while office projects outside the city's core have found tenants, downtown vacancy is still relatively high. "That's the one area where the market is fairly soft," he said. "I would characterize that very much as a tenant's market."
A bright spot for downtown occupancy has been Red Deer College's Donald School of Business, which has added to its offerings through a campus in the city's downtown core in Millennium Centre on 49th Street.
Incentives
Red Deer offers some incentives to business, according to the city's economic development office. Red Deer's combined tax and utility rates are among the lowest in Canada and, aside from no rent controls, the city has no business tax, provincial capital tax or sales tax. It also boasts a modern fibre-optics network, good roads and three airports.
from Western Investor July 2012
