Private Sector and Owner Operators are Main Drivers of Calgary’s Activity
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 in Q3 2018. Year-to-date investment volumes total $2.55 billion, up 11% from the same period in 2017. The third quarter of 2018 saw 141 transactions, representing a total value of $893 million.
According to the Altus Group Investment Trends Survey, cap rate expectations are mixed, but are generally trending downwards as private investors and owner operators continue to drive activity in the Calgary market.
(Calgary Property Transactions – All Sectors by Quarter)
The industrial sector posted 33 transactions, representing a total of $212 million, down 1% when compared to the same quarter last year. Year-to-date investment fell by 6%, a likely result of the lack of available supply in the Calgary market. The industrial market is an exception to the overall directional trend of cap rates according to the Altus Group Investment Trends Survey which indicates that yields for single tenant industrial buildings are on the rise, while multi-tenant industrial remains flat. The top transactions for the quarter were Nicola Crosby Real Estate’s $37.9 million purchase of the distribution centre located at 8080 36th Street S.E., and Starlight Investment’s acquisition of the General Dynamics Building at 1020 68th Avenue N.E. for $26,750,000.
(Calgary Q3 2018 Property Transactions – Total $ Volume by Sector)
Q3 2018 saw 18 retail transactions worth $103 million, down 9% from the same quarter last year. Year-to-date investment volumes are up 26% in 2018 from Q1-Q3 2017. Retail investment levels have averaged $115 million over the past four quarters, with the previous quarter being the high mark over that span at $135 million. Retail cap rates are generally expected to rise, except for Tier 1 Regional Malls which are anticipated to decline. A breakdown by purchaser profile in the retail sector shows that roughly half of the properties in Q3 2018 were acquired by purchasers for their own business use.
The office market, to date in 2018, has recorded only a slight decline of 2% from the same three quarters in 2017. Two large transactions in the office sector were the major contributors to a $254 million quarter in Q3, a 179% increase from the same quarter last year; IBM Corporate Park which sold from DREAM Office REIT to Spear Street Capital for $98 million, and Remington’s $107 million sale of 10921 14th Street N.E., a design-build, agreement of sale to an end user. Overall the office sector is down 17% from Q2 2018, where a similar scenario involving two large transactions making up a large portion of that quarter’s total investment value was observed.
The apartment sector posted 13 transactions worth a total $34 million in Q3, taking year-to-date investment volumes to $112.8 million, a 33% decline from the same three-quarter mark last year. According to the Altus Group Investment Trends survey, cap rates for both downtown and suburban multi-family have compressed, indicative of fluctuating demand depending on the quality of assets available. The largest transaction this quarter was a 51-unit apartment located at 7107 Elbow Drive S.W. acquired by Mainstreet Equity Corp.
19 transactions were recorded in the residential land market in the third quarter totaling $160 million, bringing year-to-date investment to $495.8 million, a 68% increase over the same three quarters in 2017. The strong performance of Q4 2017 and Q1 2018 in the residential land markets appears to have tapered off as deal velocity and investment volumes have returned to average quarterly levels, measured over the past three years.
ICI land saw 47 transactions, the busiest quarter ever, totaling $129 million. Year-to-date 2018 investment volumes equal $432 million, an increase of 39% from the same period last year. 50% of third quarter investment was in agricultural land, while commercial and industrial subtypes contributed 26% and 21% respectively.
“With an eye to the choppy results of two struggling asset classes, office and apartment, the rise in overall commercial investment from this time last year is a positive note, particularly in the land and industrial markets,” 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.
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/datasolutions.
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.
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