By Erika Siegert, Senior Analyst, National Research Insights | 3 Décembre 2020

The impacts of the COVID-19 pandemic continued to be felt throughout the third quarter in Edmonton’s commercial real estate market. While reopening measures were initiated over the summer, the increase in infection numbers towards the end of Q3 2020 brought about calls to begin reintroducing tighter restrictions. A total of 65 transactions were recorded in Q3 2020, representing $348 million in investment value. This brings the total investment activity in the market over the first three quarters of 2020 to $1.6 billion, an increase of 9% from the same time period in 2019. While this demonstrates the persistence of certain sectors helping to maintain momentum, the relatively depressed state of the provincial economy prior to the pandemic should also be noted. Transaction counts have decreased by 22% when compared to the first three quarters of 2019 where 348 transactions were observed, compared to 273 in 2020 

Edmonton property transactions all sectors by year - Q3 20202

The apartment market represented 36% of all activity in the first three quarters this year, with a total of $600 million in transaction volume, up 81% over the same period in 2019Industrial assets have continued to be a relatively strong performer through the past year, being less affected by shutdowns and bolstered by the trend towards e-commerce. The industrial sector recorded the second largest share of activity in the first three quarters of 2020, representing nearly 23% of total volume at $375 million, and jumping almost 3% compared to the same time last year. The retail sector reached $190 million in year-to-date volume, down 35% compared to last year, and the office sector only reached $66 million year-to-date, dropping 13%. Both sectors are facing similar challenges with rising vacancies, bankruptcies and the implementation of new measures to operate safely in the current environment. Altus Group’s Q3 2020 Investment Trends Survey showed a jump in Edmonton’s average cap rates to 5.55% in Q3 2020, up slightly from 5.43% at the same time last year but down from the previous quarter. Increases were seen in Downtown Class “AA” Office and Tier I Regional Mall asset classes. Edmonton remains on the negative side of the buy/sell momentum ratio barometer, with no significant change over the previous quarters this year. The market is also subject to the national trend of buyers waiting on the gap between bid and ask to narrow. 

Edmonton overall capitalization rates Q3 2005 - Q3 2020

Notable Edmonton investment transactions during Q3 2020:

Sunlife Place, Downtown – Office
Sunlife Place is a prominent office tower located in downtown Edmonton at 10123 99th Street NW. Consisting of 27 stories, and a net rentable area of 287,135 square feet, it was acquired by Slate Office REIT from Sun Life for $32,500,000. The sale price represents a price per square foot of $113.

EPCOR Aurum Road Campus, Clover Bar Area – Industrial
Located at 2545 Aurum Road NE, this facility was a designbuild for the utility provider EPCOR. With 30 acres and 302,000 square feet of space, the industrial campus will facilitate EPCOR’s supply management and logistics. It sold for a price of $30,625,000 from developer Terra Firma Holdings Ltd.

13245 24th Street NE, Clover Bar Area – Industrial
This industrial property consists of one two-storey building with an estimated size of 53,632 square feet. It was acquired for a price of $30,000,000 by end-user Trimac Transportation.

Westlawn Village, Glenwood – Apartment
Located at 9603 165th Street NW, Westlawn Village is a 144unit low rise apartment building. The property sold for $22,450,000, or a price of $155,903 per unit. It contains a mix of units including six bachelor units, 66 one-bedroom units, 70 two-bedroom units and two three-bedroom units. 

 Edmonton property transactions by asset class Q3 2019 vs Q3 2020

(Edmonton property transactions by asset class – Q1 2019 vs Q1 2020)

Uncertainty surrounding the pandemic and the compounding effects of the provincial economic struggles was the theme for the third quarter, as has been for the whole year to dateStrong performance in the industrial sector is a trend that is likely to continue as investors have shown preference towards the fundamentals of the sector in the form of well-situated logistics centers primed to take advantage of growing e-commerce activity. Regardless, the current environment continues to reflect investor selectivity and caution. It is possible that momentum will continue for well-priced quality assetsand activity from investors taking advantage of low interest rates and competitive pricing.  

 

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ABOUT DATA SOLUTIONS

Data Solutions connects the Canadian real estate industry through the delivery of data with unparalleled breadth, integrity and relevance.  We cover new homes, investment transactions and commercial market inventory in key markets, and also provide intelligence on the national housing market and consumer home buying and borrowing patterns.

Our solutions are used by real estate industry stakeholders to gain market intelligence, identify and validate opportunities, benchmark, strategically plan, manage risk and more.

Data Solutions is part of Altus Analytics, the software and data solutions business of Altus Group, where our focus is to empower real estate clients and partners to work collaboratively to enhance decision making, drive performance and optimize transactional efficiency. Our solutions enable firms to better organize and manage data and connect with the right information and analytics to help them gain a complete picture of real estate assets, portfolios and transactions.

For more information on Data Solutions, please visit www.altusgroup.com/data.

 

ABOUT ALTUS GROUP LIMITED

Altus Group Limited is a leading provider of independent advisory services, software and data solutions to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Expert Services, reflect decades of experience, a range of expertise, and technology-enabled capabilities. Our solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, we have approximately 2,500 employees around the world, with operations in North America, Europe and Asia Pacific. Our clients include some of the world’s largest real estate industry participants across a variety of sectors.  Altus Group pays a quarterly dividend of $0.15 per share and our shares are traded on the TSX under the symbol AIF.

For more information on Altus Group, please visit: www.altusgroup.com.

 

MEDIA CONTACT:

Elizabeth Lambe
Manager, Communications
Altus Group
(416) 641 – 9787
elizabeth.lambe@altusgroup.com

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Erika SiegertSiegertresearch

Analyste principale, Perspectives de recherche nationales, Solutions de données

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