As the man offering economics wisdom to city officials and business leaders, Rose keeps a close eye on the numbers.
Among other things, those numbers are suggesting that Alberta and its capital are going to be experiencing a shortage of labour that will ultimately cut growth to closer to 3 per cent. It’s likely to settle around 4 per cent this year in Edmonton after a very solid 2011.
“We’re just running out of people. That’s the constraint in Edmonton, and certainly the province as a whole,” Rose said.
Edmonton’s unemployment rate dropped to 4.9 per cent in spring, and now there simply aren’t that many applicants for the jobs that are being advertised.
“We have a lot of jobs available, but not enough people chasing them,” explained Rose.
Oil prices
Fuelling everything growth wise, of course, is investment in Alberta’s oilsands industry. It drives not only the entire Fort McMurray economy and office jobs in Calgary, but what happens in Edmonton and the centres around the capital.
As of May, things were still clicking along quite well in the oilsands industry, though Rose notes the investment in the sector is one over which there is very little local control. That means things could start to dry up if projects stall on oil-price doldrums.
The price of crude had dropped from around $100 per barrel in January to $80 per barrel in mid-July, reminding all that the bubble could certainly shrink, if not burst.
“Let’s not get smug about this,” noted Rose. “There are questions around the energy sector as a whole.”
While oil-price fluctuations should lead us to some sober second thought about growth, other Edmonton numbers are certainly healthy.
Affordable
The city’s population hit 812,201 last year, with growth of 11.2 per cent over the five-year period from 2006 to 2011. That was even faster than the rate for the previous five-year period – even with the recession that arrived in 2009.
Edmonton remains the fifth-largest city in the country, with an economy that balances oilsands-related work with manufacturing and government-sector jobs.
Its census metropolitan area grew by a slightly higher rate – 12.1 per cent over five years – reflecting just how hot the oilsands-support sector is in this province.
The growth in population is supported by the city’s livability – something that’s reflected not just in its river valley park system, but also in housing prices.
Said Realtors Association of Edmonton president Doug Singleton, “Edmonton is bucking a national trend and making housing more affordable than other cities.”
Backing up Singleton’s contention is the fact that the city’s “housing affordability index” is only 32.4 per cent. That is, it only takes 32.4 per cent of a typical household’s income to go toward a mortgage payment, utilities and taxes.
Noted Singleton in early June: “While housing prices are higher in Edmonton than last month, they are inching up in manageable increments.”
The realtors association says a strong economy with resilient consumer confidence has resulted in strong housing sales in the Alberta capital this spring.
Selling prices are definitely up, with the overall median price for a residential property sitting at $333,900 for the month of May, up about 5.7 per cent from a year before. The median single-family home price was also up from 12 months earlier, by about 3.9 per cent to $370,000.
Building activity is up in the capital again in 2012, with city building-permit totals hitting $977 million for the first four months of the year, up about 22.5 per cent over the same period in 2011.
Activity and values increased in all categories except institutional building.
Commercial boom
The most prominent increase is in commercial-permit values, up almost $94 million in the first third of the year, or about 52 per cent. Most of that was in the industrial warehouse sector, reflecting Edmonton’s status as a retail and commercial hub.
The Alberta capital is also featured prominently in a major projects list put together by the provincial government. That list includes some major additions for the first three months of 2012 – everything from an $80 million condo-tower project known as “The Quarters” to a $30 million data centre and a $7 million science centre expansion.
There were about $978 million in projects wrapping up in Edmonton in the first part of the year, including such notable landmarks as the new $250 million EPCOR tower.
Interest in retail space in Alberta’s capital is also strong.
According to Cushman and Wakefield, the overall vacancy rate in retail was 2.4 per cent at the end of 2011 but is expected to fall further through the remainder of 2012.
The commercial property firm is predicting “continued downward pressure on retail vacancy, which will approach just over 2 per cent.”
There is some good news for those considering an investment in Edmonton’s commercial property market. Construction costs have stabilized somewhat, giving both developers and tenants more cost certainty for their growth plans, Cushman and Wakefield concluded.
Overall, things are going pretty well in a place that’s moving toward a new hockey arena downtown and long-awaited redevelopment of its city centre airport lands.
Noted Ron Gilbertson, former head of the Edmonton Economic Development Corp., “I am more convinced than ever that Alberta’s capital city ranks as one of the world’s top economic performers, backed by quality of life offerings that can challenge our peer cities.”
That quality-of-life advantage is reflected when it comes time to buy a home, notes economist Rose.
“When you factor in very high salaries that people are being paid here, it’s one of the most affordable [housing] markets in the country.”
Quick facts: Edmonton, AB
Population 812,201
Growth rate 11.2 per cent from 2006 to 2011
Apartment vacancy rate 2.7 per cent
Average detached house price $370,000
Unemployment rate 4.9 per cent
This article is from the August 2012 Western Investor.
