Investment in Calgary’s office market cooled in 2013 after a period of multi-year growth, says a new report by Avison Young.
The commercial real estate firm’s report said the overall transaction volume for the six asset classes (office, retail, industrial, multi-family, industrial land, and residential land) in 2013 reached $2.3 billion, comprising 359 sales. Volume was down significantly from 2012 when $4.4 billion over 493 transactions took place.
It said 2013 was about equal to 2011 when total transactions reached $2.32 billion.
The office sector represented the largest dollar volume component of 2013 sales at 45 per cent, while the industrial sector led the year in terms of activity with 89 transactions completed.
“The Calgary market witnessed a lower level of overall transaction volume in 2013 compared to 2012, although a significant level of land sales transactions demonstrated continued appetite from investors and developers in the slower environment,” said Avison Young.
“The low price environment of natural gas and the delayed decisions on new pipelines have each resulted in challenges for a number of players in the oil and gas sector. The office leasing market through 2013 was subdued, but the challenging environment has been tempered by prospects of increased population and the subsequent need for more housing units in the greater Calgary market.”
The office sector saw sales of $1.03 billion. In 2012, that sector experienced sales of $1.6 billion which represented 36 per cent of all investment activity in the city. In 2011, it was $1.02 billion and 44 per cent of sales.
Susan Thompson, business development manager of real estate for Calgary Economic Development, said the pace of the city’s economy slowed down a little bit in 2013.
“We had a pretty good level in 2012. Nothing keeps going up forever and if you look at the long-term trend, 2013 is pretty much bang on the 10-year trend. So there’s nothing wrong with what happened in 2013,” said Thompson. “It was just coming off that really hectic, fast-paced volume that we set in 2012.”
She said we can expect a steady and stable year for transactions in Calgary’s commercial real estate market in 2014.
“Calgary’s economy is still doing relatively well. We’re still predicted to be growing. A lot of companies are just waiting for that go-ahead on any of the pipeline projects and we’ll probably even start to see even a bit of an uptick,” she said.
Source: Calgary Herald