By Erika Siegert, Senior Analyst, National Research Insights | December 2, 2020

The effects of the COVID-19 pandemic and the struggling provincial economy continued to impact Calgary’s commercial real estate market through the third quarterWhile the summer saw the gradual re-opening of the economythe fall season has seen a regression towards renewed restrictions in order to combat the second wave of the virusIn total, Q3 2020 recorded 68 transactions representing $233 million in investment volume, marking a decrease of 25% compared to Q3 2019. This brings total investment activity in the market to $1.4 billion through the first three quarters of 2020, down 20% compared to the same time period in 2019. Transaction counts have decreased alongside investment volume on a yeartodate basis, with 276 transactions recorded as of Q3 2020, compared to 362 over the same period in 2019 – a decrease of 24%. This decline in the yeartodate totals from 2019 to 2020 is in part reflective of the state of the Calgary market prior to the pandemic, which was a tepid environment to begin with.

Calgary property transactions all sectors by year Q3 2020

Most asset classes observed decreases in investment volume compared to year-to-date totals last year, with the exception of residential land and office. At the end of Q3 2020, residential land totalled $320 million in transaction volume, up nearly 11% from the same period in 2019. The apartment and industrial sectors saw a decrease in year-to-date values dropping only 22% and 26%, respectively. While the industrial sector had been a relatively strong performer over the past year, it saw an underperforming quarterwith 19 transactions totaling only $56 million, down 33% from Q3 2019. Altus Group’s Investment Trends Survey Q3 2020 results showed a slight decline in cap rates for benchmark asset classes from the previous quarter, despite a yearoveryear increase in the overall average in Calgary, up from 5.28in Q3 2019 to the current rate of 5.48% in Q3 2020. Calgary remains on the negative side of the buy/sell ratio, but has seen positive momentum so far this year. The market is also subject to the national trend of buyers waiting on the bidask gap to narrow. 

Calgary overall capitalization rates - Q3 2020

Notable Q3 2020 transactions: 

Queens Park Townhomes 501 40th Avenue NW, Calgary – Apartment
CAPREIT was the vendor of this 6.6acre, 188unit townhome project located in Queens Park Village. It sold to Mainstreet Equity Corp. for $30,500,000, representing a price per unit of $162,234. The unit mix consists of 140 twobedroom units and 48 threebedroom units.

Trinity Hills, Calgary – Residential Land 
Located at 1470 Na’a Drive SW, Carlisle Group acquired this 6.7acre parcel zoned for mixed use residential for $12,650,000, with a price per square foot of site area of $44. Trinity Hills is a mixeduse urban village under development in the SW quadrant of the city. The development features anchor tenants such as Save on Foods, Goodlife Fitness, and Mountain Equipment Co-op.

100 Canal AvenueStrathmore – Retail
This auto dealership was acquired by national automotive dealership Olympic Auto Group for $8,292,500, representing a price per square foot of approximately $492 based off the estimated square footage of the building.

3600-3650 19th Street NE, Airways – Industrial
This property consists of a multitenant flex warehouse, containing 51,064 square feet spread out over two addresses and four buildings. It was bought by MICA Group Ltd., a local private investor. The purchase price of $7,350,000 represents a price per square foot of $144. 

Calgary property transactions by asset class Q3 2020 YTD

The uncertainty surrounding the pandemic has influenced all sectors in Q3 2020. Investor preference towards the industrial sector is a trend that is likely to continue regardless of the results seen this quarter, as investors have shown preference towards the fundamentals of the sector in the form of logistics and e-commerce. Residential and commercial land also offer some relative safety for capital investment while waiting out current uncertaintiesInvestor selectivity and the desire for quality assets remains a theme in the current environment, and buyers may use low interest rates and competitive pricing to their advantage going forward.

 

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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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