By Kruti Desai, National Research Insights Manager | May 27, 2020

Edmonton records over $1 billion in commercial real estate investment activity in the first quarter of 2020

The Edmonton commercial real estate investment market saw a strong first quarter in 2020. A total of 132 transactions were observed, totaling $1.1 billion and representing a 60% increase compared to Q1 2019. The momentum seen in the first few months of the year has drastically changed with the COVID-19 crisis, the subsequent protection measures, and the temporary suspension of markets that has followed. It is possible that some momentum will continue to carry the market into early Q2 as transactions are typically negotiated months prior to closing. However, the first significant impacts will begin to be seen in the second quarter of this year.

Edmonton property transactions by year - 2013 to Q1 2020(Edmonton property transactions – all sectors by year)

With protectionist measures and oversupply in global crude oil markets having a direct effect on the local provincial economy, Edmonton is experiencing an additional challenge along with the pandemic. The severe drop in oil prices has led to drastic cutbacks in the provincial energy sector, the effects of which may have a longer lasting effect on the local economy than the pandemic itself. These challenges have further compounded a market that was already facing soft demand before the crisis. Sentiments towards Edmonton in Q1, according to Altus Group’s Investment Trends Survey, did show overall cap rate compression and an upward momentum on the location barometer, with investor preference still on the sell side.

Approximately 50% of transaction volume was attributed to the apartment sector which was bolstered by several large sales and a five-building portfolio. The strength of the apartment sector seen in Q1 offers some insight into an asset class that has continued to show strength and upside.

Edmonton overall capitalization rates Q1 2005 - Q1 2020

(Edmonton market area cap rates – Q1 2005 to Q1 2020)

Notable Edmonton investment transactions:

The Mayfair on Jasper – Apartment
Located in downtown Edmonton at 10803 Jasper Avenue NW, The Mayfair was developed by Procura and sold to Centurion Properties for $100 million on January 6th, 2020. The Mayfair is a 238-unit multi-family rental building with ground floor retail. It was brokered by the apartment team at Institutional Property Advisors Marcus & Millichap at a reported 4.4% cap rate.

Centurion Asset Management Portfolio – Apartment
Brokered by Institutional Property Advisors Marcus & Millichap, this portfolio consisted of five high-rise apartment buildings, accounting for a total of 856 units. The total price for the portfolio amounted to $205 million.

Chartwell Emerald Hills – Apartment
Chartwell expanded its portfolio of senior’s residences with a property now known as Chartwell Emerald Hills. The property was recently developed (opening on November 8th, 2019) in Sherwood Park at 6101 Eton Boulevard. The property consists of 184 private bay independent supportive living suites and 72 suites funded by Alberta Health Services and transacted for $120,000,000.

Edmonton property transactions by asset class Q1 2019 vs Q1 2020

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

“A strong start to 2020 for Edmonton is certainly going to be cut short by the effects of the coronavirus pandemic. As market conditions are rapidly changing based on new developments in the fight against the virus, it is difficult to predict the length and severity of the effects on the commercial real estate investment market. Edmonton’s apartment market has continued to show strength and it will be interesting to see if it can rebound quickly, once restrictions are lifted,” noted Ben Tatterton, Manager, Data Solutions at Altus Group.

 

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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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