Edmonton's commercial real estate investments falter after strong 2018

2018's total of commercial real estate and land sales had been the third consecutive year-over-year increase

By
Western Investor
August 8, 2019





Insignia apartment tower
Boardwalk Real Estate Investment Trust paid $35.6 million for the Insignia apartment tower in Edmonton this April. | Submitted


After posting $3.94 billion in commercial real estate investments in 2018, Edmonton’s pace faltered in the first quarter of this year, stumbling 12 per cent from a year earlier. Sales of retail properties in Q1 fell to the lowest level in nearly three years, according to the latest Edmonton Flash Report from Altus Group.

Edmonton’s 2018 total of commercial real estate and land sales had been the third consecutive year-over-year increase, Altus noted, but investors will have to rally to keep the pace going in 2019. First-quarter sales were also down 22 per cent compared with the last three months of last year.

The performance so far this year has been mixed. While retail property sales have cooled, the office and multi-family rental sectors hit strong volumes in Q1 with both more than doubling the level of investment from the same period in 2018. 

Major deals included the April 1 sale of the Insignia apartment tower to Boardwalk Real Estate Investment Trust for $35.6 million, and Skyline Apartment Real Estate Investment Trust spending $56 million for a 240-unit apartment building. 

Residential land sales also had a strong start to this year, with Q1 investment totals up 43 per cent from Q1 2018, with 75 transactions worth a total of approximately $300 million. 

But all this was not enough to offset significantly lower transactions in the retail and industrial-commercial land sectors – each was down more than $115 million in the first quarter compared to Q1 2018, with retail at its lowest level since the second quarter of 2016. In 2018 the major retail transaction was the sale of Village Landing for $51.2 million.

Still, some substantial deals were reported in the industrial sector in the first quarter, including  the $24.5 million purchase of seven industrial buildings by Integrated Asset Management

Edmonton’s industrial market is challenged by a huge amount of supply coming to the market. About 1.7 million square feet of new space was completed in the 12 months ending this March, compared to less than 100,000 square feet in the previous year.  At the end of May, another 2.4 million square feet was under construction.

“The increased new supply was a factor in the rise of the industrial vacancy rate to 6.5 per cent as of the end of Q1,” Altus noted.


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