Four Year High in Deal Volume in the Calgary Commercial Real Estate Market in 2017
2017 saw a total of 539 sales transactions over $1 million, representing a total investment value of $3.3 billion
CALGARY ‒ Altus Group, a leading provider of commercial real estate services, software and data solutions, today announced the cumulative results for commercial real estate investment in the Calgary Market Area through 2017. Q4 2017 saw 162 transactions worth nearly $1.1 billion, bringing the total for the year to $3.3 billion. Both investment and deal flow activity were up in 2017 compared to 2016, a 5% increase in investment volumes and a 30% increase in deal counts. Investment volume is likely to be flat in 2018, according to the Altus Group Investment Trends Survey, the sentiment from investors indicates that for the most part, cap rates have flattened.
Source: Altus Group
Capital flow in the office market declined to $830.8 million but still represents the largest contribution, by asset class, to the overall market. A significant portion of the activity was generated by Dream Office REIT selling an office portfolio; five of the properties were located in the downtown core and acquired by Slate Asset Management. The total value of the portfolio was $218.2 million, representing 26% of all sales in the office sector.
The industrial market in 2017 had its fourth strongest year on record with $667.3 million in total transactions, $20 million short of the annual record set in 2008. The most active purchasers included York Realty, Hungerford Properties and Mountain Properties, each investing between $17 millon and $25 million. Purchasers investing in property for their own use accounted for a good portion of the sales activity in 2017. Calgary’s industrial availability rate is currently 7.2%, the lowest measure since early 2016, driven mainly by demand in the distribution logistics sector, as evidenced by the new 600,000 square foot Amazon distribution centre currently under construction in Balzac’s Nose Creek Business Park.
Despite contributing only 15% towards overall investment volume in 2017, the residential land market experienced strong growth from 2016. The sector recorded 79 transactions, up 39%, totaling $490 million and nearly double the 2016 total investment. Significant residential land transactions featured acquisitions by Minto, Hines and Capexco. Acquisitions were varied in terms of expected end product from long term and low density land to a high density site, the Sam Livingston building.
The ICI land sector posted its third strongest year to date, 45% off the 2008 record. One quarter of the overall ICI land investment was placed into industrial land.
“With overall deal velocity on such an uptick, not only from developers and institutional investors, but from the owner/user and local markets, confidence in the Calgary commercial real estate market appears to be building, setting the stage for a strong start in 2018,” noted Paul Richter, Director, 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.
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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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