Calgary is often held up as a poster child of a city crushed by the downturn in oil prices, but a closer look at Alberta’s biggest city finds a different reality.
And, as leading members of the Organization of Petroleum Exporting Countries (OPEC) blink, Calgary could be sharing in an eye-opening recovery in oil prices faster than many believe. The price of crude oil broke above US$50 a barrel recently as OPEC considered production cuts.
Some of Canada’s more astute real estate investors are already betting big on Calgary’s comeback.
Last month, the real estate arm of the Healthcare of Ontario Pension Plan (HOOPP) bought a 50 per cent share in the iconic 38-storey TransCanada Tower in downtown Calgary. The tower is home to TransCanada Corp., Canada’s largest pipeline and energy infrastructure company.
HOOPP manages about $64 billion worth of assets for its members, so we suspect its acquisition team is pretty sharp.
Days after the HOOPP hop into Calgary, Vancouver-based Pure Industrial Real Estate Trustbought a portfolio of Alberta industrial buildings, mostly in Calgary, covering 1.2 million square feet of leasable space.
RioCan REIT, the largest real estate investment trust in Canada, began construction this year in Calgary’s East Village on a $300 million, 600,000-square-foot condominium tower with 180,000 square feet of retail.
Torgan Group, also based in Toronto, recently broke ground on a $200 million shopping mall in north Calgary and had no problem pre-selling, not leasing, all the space.
Great Gulf, another real estate giant from Toronto, has started work on a massive mixed-use development in downtown Calgary that will feature four towers of condominiums, with retail and institutional space. As Great Gulf president Christopher Wein explained to the Financial Post, “There are a number of us who look at Calgary and think ‘wow, there are great opportunities to come into the city and do some real city building.’”
A close look at key economic numbers shows why some see opportunities. Monthly retail sales in Alberta, for example, are running at $6.1 billion a month, second only to B.C. in the West.
Despite reports of a residential crash, Calgary’s detached- house sales in September were higher than a year earlier, and the average price was up 5 per cent. For the year, total Calgary housing sales are down 8 per cent from 2015, but average prices are within $2,000 of what they were back in booming 2014.
Calgary, welcome back.