A total of 140 transactions representing an investment volume of $739 million were recorded for the Edmonton market area in the third quarter (Q3) of 2021, much of it linked to “beds and sheds” – the industrial and multi-family sectors.
The total investment volume for the year in Alberta’s capital city amounted to $1.76 billion, which is roughly on par with the first three quarters of 2020. However, when comparing Q3 2021 to the same quarter last year, the market is up 94 per cent, according to Altus Group.
The third quarter was bolstered by several large transactions and saw the return of some institutional capital to the market.
Together, apartment and industrial captured 71 per cent of Edmonton’s total dollar volume invested in the third quarter of last year. Industrial activity amounted to 36 transactions, worth $226 million.
Among the largest industrial deals were the purchase by Sunlife of a 604,780-square-foot, multi-tenant complex on 115th Avenue NW for $94.6 million; and the $12 million sale of 105,000-square foot warehouse, also in Edmonton’s northwest, to Nexus Real Estate Investment Trust (REIT).
Overall, the multi-family sector saw 26 transactions, totaling $297 million, which was seven times the dollar volume from the previous quarter, and five times the volume from the same quarter of last year.
Mainstreet Equities purchased a 20 storey, 323-unit apartment complex near the University of Alberta for $44.1 million, representing a price per unit of $136,687, among the largest multi-family deals.
The third largest sector in terms of dollar share was the ICI land sector. In total, 42 ICI land transactions occurred, amounting to $141 million, a 31 per cent increase over the previous quarter, and a 190 per cent increase over Q3 of 2020.
Retail saw 22 transactions, worth $36 million, a 20 per cent decrease from the previous quarter, and a 10 per cent decrease from the same quarter last year. The residential land sector saw five transactions, worth $10 million, an 84 per cent decline from the previous quarter, and a 70 per cent decline from Q3 2020.
According to Altus Group’s investment trend survey for the third quarter of last year, Edmonton’s retail “remained on the sell side for all available products, with downward pressure.”
With $468 million in sales in the third quarter (Q3) 2021, Calgary was on track to top $2 billion in commercial and industrial real estate sales in 2021, according to Altus Group.
And this was before the $1.2 billion sale of the Bow office tower and the $475 million purchase of the twin-tower Western Canadian Place office complex, both to Chicago-based Oak Tree Real Estate Capital, to end 2021.
It is industrial and multi-family that are expected to lead the investment curve into 2022, however.
Altus reports that the Calgary’s commercial real estate market recorded 115 transactions for a total investment volume of $468 million in the third quarter, bringing the total investment up 37 per cent from the first three quarters of 2020.
Industrial sales led the commercial and industrial assets investment parade in the third quarter, with 27 transactions valued at $188 million. This sector was dominated by two substantial distribution logistics centre deals. These were the $69.7 million purchase of a Canadian Tire 496,000-square-foot distribution centre by Skyline Commercial REIT; and the $32.18 million sale of the Valad Construction headquarters industrial and office complex to Nexus REIT.
The ICI (industrial-commercial-institutional) land sector was the second most active in terms of dollar volume with 38 transactions amounting to $83 million, up 62 per cent from Q3 of 2020.
The multi-family rental apartment sector saw 15 transactions totalling $82 million, a 70 per cent increase from the same point last year, and only a marginal decrease from the previous quarter.
Among the biggest deals was the sale of a 288-unit multi-family property in Calgary’s University District to Chicago-based Harrison Street. The price has not been released but the Arial complex is considered a prime property.
The retail sector tallied $44 million in transactions amounting to a 110 per cent increase from Q3 2020.
The biggest retail sale was the $8.35 million purchase of the Hansen Ranch Plaza, a near-12,000-square-foot retail centre in northwest Calgary, bought by local investors.
“Calgary’s beleaguered office market has remained flat, with five transactions amounting to $15 million, a negligible change from the same quarter last year,” noted Ben Tatterton, manager of data solutions at Altus, who prepared the Calgary report with national research manager Krut DSesai.
The landmark sale of the Bow office tower will be registered in a future quarter, Altus noted.
The two-million-square-foot Bow tower was purchased in August from Toronto-based H&R REIT by Oak Street Real Estate Capital for $1.216 billion, in a deal expected to close by the end of this year. In December, Oak Street bought the Western Canadian Place, also in downtown Calgary.
Meanwhile housing sales in November reached 2,110 transactions, just shy of the record for the month set in 2005, as the sales-to-new-listing ratio hit a blistering 100 per cent.
“Lending rates are expected to increase next year, which has created a sense of urgency among purchasers who want to get into the housing market before rates rise,” said Calgary Real Estate Board chief economist Ann-Marie Lurie. She added that supply levels have tightened, causing prices to rise.
The benchmark composite home price in November was $461,000, up nearly 9 per cent from November of 2020, according to Lurie.