First Half Investment Levels Down Significantly from Last Year for Edmonton Market
Q2 2019 registered 162 transactions in excess of $500,000, worth a total of approximately $419 million
EDMONTON ‒ Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the Q2 2019 results for commercial real estate investment in the Edmonton Market Area. In total, close to $419 million in commercial sales were recorded, bringing the year-to-date total to $1.1 billion, a decrease of 41% from the first half of 2018. Q2 volumes represented a decrease of 62% from the same quarter last year and the third straight quarter of decline from the high mark set in Q3 of 2018.
The drop in commercial investment comes at a time when Edmonton exhibited an uptick in investor preference in Q2, according to the Altus Group Investment Trends Survey. The trend demonstrates that ‘opportunity’ purchases continue to drive the market as investors target higher yields in undervalued assets located in well-serviced areas, unlocking potential through redevelopment plays. The improvement also defies the economic uncertainty that the market has been facing this year.
(Edmonton Property Transactions – All Sectors by Quarter)
Overall the majority of sectors experienced declines in transaction volume in the second quarter from the same quarter last year. The only sector posting an increase in Q2 was ICI land, which was up 17% year-over-year; however, this sector is down 37% year-to-date compared to the first half of last year. ICI land recorded 66 transactions worth a total of $123 million this quarter and most of the top transactions in this category were acquired by end-users.
The apartment sector led the way in market share for Q2 with 27 transactions worth close to $130 million, which represents a 31% share of market activity. The apartment sector experienced a year- to-date decline of 35% compared to the first half of 2018. Nevertheless, several large transactions occurred in Q2 with the top one being the Insignia Tower, a 125-unit high rise apartment acquired by Boardwalk REIT for $35,610,000. The sector has also seen little change in cap rates from Q1, according to the Altus Group Investment Trends Survey.
The industrial sector had the third highest market share of Q2 representing 19% of all transaction volume. Q2 saw 32 industrial transactions worth a total of $81 million. This represents a decline of 73% from the same quarter last year, and a decrease by 47% year-to-date compared to the first half of 2018. Industrial cap rates, according to the Altus Group Investment Trends Survey, have remained unchanged in Q2.
(Edmonton Q2 2019 Property Transactions – Total $ Volume by Sector)
“While the market has experienced declining investment volumes since mid-2018, the apartment and industrial sectors continue to be the preferred asset classes, providing reasonable returns while servicing a continued demand from users” 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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