Straight Up Real Estate

April 2012 Market Statistics

Mon, 30 Apr 2012 18:59:00 GMT

Alberta’s economic boom is back. Province leads country in growth in 2011

Fri, 27 Apr 2012 22:36:00 GMT

By Mario Toneguzzi, Calgary Herald

CALGARY — Alberta topped all Canadian provinces in 2011 with the strongest economic performance, according to Statistics Canada.

The federal agency reported Friday that real domestic product advanced 5.2 per cent in 2011 after a 3.3 per cent increase in 2010.

It was the highest economic growth rate in Alberta since 6.2 per cent in 2006.

Douglas Porter, deputy chief economist with BMO Capital Markets, said the growth rate for 2011 was above and beyond what BMO estimated.

“It’s not a complete shock given some of the other indicators we’ve seen recently. The province is leading the rest of the country by a country-mile in terms of job growth recently and we’re seeing an echo of that in retail sales as well,” he said. “What’s driving it? Simply put is the strength in oil prices and the rapid rise in production in the province and alongside of that we’re seeing large population inflows into the province.”

Is it safe to say the boom is back?

“I think five per cent growth does fit the bill as a boom,” said Porter. “It might not be quite as strong as what we saw back in the middle part of the last decade but it is certainly moving back onto the same radar screen.”

In 2011, GDP increased in every province and territory except the Northwest Territories. Nationally, real GDP rose 2.6 per cent in 2011 after increasing 3.4 per cent in 2010.

Statistics Canada said higher energy prices led to gains in oil and gas extraction and exploration activity in Alberta and construction of oil and gas engineering projects also contributed to the growth.”

Manufacturing output increased 11 per cent with significant gains in machinery, fabricated metal products, chemicals and wood products. Output of services increased 4.1 per cent, led by retail and wholesale trade; transportation services; professional, scientific and technical services; and accommodation and food services, it said.

“We expected it to be good, but not this good,” said Todd Hirsch, senior economist with ATB Financial of Friday’s Statistics Canada data. “The slowdown, which started in 2007 and 2008, turned into a rather steep contraction in 2009 when the real economy shrunk by 4.4 per cent. That was fairly short-lived, however, and by 2011, growth had rebounded to the fastest pace in five years.

“With the energy sector firing on most cylinders — the natural gas industry the notable exception — chances are high that the province will enjoy another nation-leading year of growth in 2012.”

Porter said one difference between the boom of 2006 and 2011 is the housing market.

“We don’t have home prices in Calgary and Edmonton going up by 30, 40, 50 per cent a year. Quite the contrary. They’ve basically been flat for the last couple of years but of course they’re starting at a much higher level than they did back then,” said Porter.

He said BMO is still calling for Alberta to be the fastest growing province in the country over the next couple of years as well.

BMO is forecasting for growth of just under 3.5 per cent in both 2012 and 2013.

“So maybe not quite as red-hot as what we saw last year but still very healthy growth especially given the fact it’s coming on top of what are already relatively robust conditions,” said Porter.

March 2012 Market Statistics

Sat, 31 Mar 2012 22:37:00 GMT

Enbridge expansion revs up Edmonton's commercial real estate market

Wed, 28 Mar 2012 22:29:00 GMT

BY BILL MAH, EDMONTONJOURNAL

EDMONTON — First there was the Epcor Effect.

Now Edmonton’s downtown office market is undergoing the Enbridge Effect — what commercial real estate firms are calling the impact of the energy company scooping up vast tracts of office space as it prepares to bolster its local workforce.

“We do plan to hire 2,000 people in 2012 to support our extensive slate of pipeline and renewable energy growth projects,” said Graham White, a spokesman for Calgary-based Enbridge.

“A significant portion will be based out of Edmonton so the space now allows us to prepare for Enbridge’s future growth for the next few years.”

The Calgary-based company is trying to win approval for the controversial Northern Gateway pipeline to carry bitumen from Edmonton to Kitimat, B.C., and is pushing ahead with plans for projects in the U.S.

In separate reports released this week, Colliers International and Avison Young say Enbridge has pushed down vacancies and is putting upward pressure on lease rates.

“Enbridge have single-handedly changed the landscape of the office market,” said Cory Wosnack, a principal with Avison Young’s office leasing division.

Enbridge in the past five months expanded by leasing about 218,000 square feet. That includes 90,000 square feet in the TD Tower, more than 50,000 square feet in Enbridge Place and about 70,000 square feet in Manulife Place.

“That’s all positive absorption,” said Colliers executive vice-president Ian Bradley. “These people are not moving out of another building, to our knowledge, to occupy these new spaces. This is pure positive absorption which directly affects the vacancy rate.”

Taking large blocks off the market will also limit options for other tenants looking for more than 30,000 square feet, he said.

Enbridge’s expansion is enough to change the vacancy rate in the downtown financial class A buildings by 2.45 per cent, Colliers says.

The Enbridge Effect is putting upward pressure on Class A office asking rates, “most evident in Manulife Place where asking rates have gone from $20 per square foot to $27 per square foot, a 40-per-cent increase in two months,” Bradley said.

He called Manulife Place a bellwether of premium office space in the financial core and its increase helps set the benchmark for rates.

Rates now sought are beginning to rebound to 2007-08 levels, before the economic downturn and Epcor Tower, he said.

“Tenants are well advised not to delay office space decisions as tomorrow’s prices will be higher.”

Before Epcor Tower — Edmonton’s first downtown office tower since 1990 — opened last year, landlords secured tenants with lower rents and incentives. The tower’s opening left large vacancies as Epcor vacated its old building and Justice Canada left the TD Tower, the Bank of Montreal Building and Manulife Place.

“Although Epcor expanded, taking more space than they had before, the Epcor Tower added additional space to the market so the net effect was an increase in available space,” Bradley said.

“This (Enbridge), on the other hand, is not against the backdrop of new supply; this is absolutely new demand.”

Avison Young’s Office Report released Tuesday says Enbridge has secured 223,000 square feet of expansion office space in three buildings in just over six months. Enbridge now occupies over 600,000 square feet in downtown Edmonton.

“This is having an immediate effect on the local market,” the report said.

“Without the Enbridge expansion, the overall vacancy rate in the financial district would be 11.4 per cent rather than the current vacancy rate of 9.4 per cent.”

The absorption of space has landlords looking to increase lease rates by up to 20 per cent as the supply of large contiguous space falls, the report said.

“At the end of the day, this is good news,” Wosnack said.

“We want landlords to have more confidence in the marketplace because we can eventually see perhaps new construction and there will be opportunities for more suburban buildings to be developed because large blocks of vacancy don’t exist downtown.”

February 2012 Market Statistics

Wed, 29 Feb 2012 18:57:00 GMT

January 2012 Market Statistics

Tue, 31 Jan 2012 18:56:00 GMT