Uncertainty Remains as Calgary Commercial Investment Volume Falls in the Second Quarter
Q2 2019 registered a total of 99 sales transactions over $1 million, representing a total value of $426 million
CALGARY ‒ Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the results for commercial real estate investment in the Calgary Market Area for Q2 2019. Q2 saw 99 sales transactions, totalling $426 million, bringing the total investment volume for the first half of 2019 to $1.2 billion, a decrease of 26% percent from the first half of 2018.
Overall investment volume was down 56% from the same quarter last year. This was a reflection of both lower sales volume and deal count, with 99 transactions being the lowest quarterly total seen since Q2 of 2016. In contrast to this, Calgary experienced an uptick in buy/sell momentum ratio according to the Altus Group Investment Trends Survey from the previous quarter, reflecting investor preference for strategically located undervalued assets. Meanwhile, overall capitalization rates experienced a marginal increase over Q1.
(Calgary Property Transactions – All Sectors by Quarter)
There were mixed results for investor preference of asset type in Q2. The largest portion of investment went to the industrial and apartment sector at about 20% each of the total investment volume, followed by the ICI and residential land sectors at roughly 16% each.
After posting four consecutive quarters of growth, and a record high of $287 million in Q1 2019, the industrial sector regressed in Q2 with 20 transactions representing $85 million in value. However, year-to-date volumes were still up 24% from the first half of 2018. The largest sale of the quarter was 285062 Frontier Road, which was acquired by Guardian Capital Corp. for $17.4 million.
(Calgary Q2 2019 Property Transactions – Total $ Volume by Sector)
The apartment sector recorded 17 transactions, worth $84 million up 54% from the same quarter last year. For the first half of 2019, the apartment sector was up by 150% compared to the first half of 2018. The top transaction of the quarter was Cedarbrae Manor, which sold for $18.2 million to Mainstreet Equity Corp.
The residential land sector recorded a total of 12 transactions, worth close to $69 million, a 52% drop from the same quarter last year. The top transaction of the quarter was the Homes by Avi acquisition of the Calgary West Campground along the Trans-Canada corridor at the west end of the city. The site was purchased for $19 million or $392,076 per acre.
The third most valuable transaction of the quarter was in the hotel sector. The Holiday Inn Canmore was acquired by 3G Equity Inc. for a price of $17.5 million or $176,768 per door. As far as the sale of improved hotel assets go, the sector has seen little investment over the past three years as much of the activity has been concentrated on delivering new product to the market.
“While the second quarter results showed a steep decline in sales volume from the same quarter last year, it’s also noted that the investment totals for the market were only down by 26% year-to-date compared to 2018. It appears that the market continues to remain in a holding pattern as we move into the second half of the year,” noted Ben Tatterton, Manager, Data Solutions at Altus Group.
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.
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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.
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