Large Transactions Continue to Bolster Edmonton Commercial Market Above Normalized Levels
EDMONTON ‒ Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the Edmonton market area’s real estate investment results for Q3 2018. Year-to-date investment levels have reached $3.1 billion, a 38% increase from the first three quarters of 2017 and an 86% increase from the first three quarters of 2016. Q3 saw 198 transactions over $500,000, which equals a 43% increase from the same quarter last year.
According to the Altus Group Investment Trends Survey, overall cap rates have decreased moderately as demand remains strong. Investment volumes in Edmonton, through 2018, have been boosted by large institutional investors making single purchases bringing overall investment levels past the $1 billion mark for two consecutive quarters. The bulk of the market activity however is being conducted by private localized entities, followed by owner operators.
(Edmonton Property Transactions – All Sectors by Quarter)
The office market, a major contributor to overall totals, has posted $517.4 million in sales volume to date in 2018 with Q3 posting 16 office transactions worth $456.4 million, representing an increase of 165% from Q3 2017. The bulk of this quarter’s activity was attributed to the office sector which accounted for 40% of all investment activity. The single transaction that accounted for most of the office activity this quarter was the City of Edmonton Tower, which was purchased by AIMCo for $400 million on July 16th.
(Edmonton Q3 2018 Property Transactions – Total $ Volume by Sector)
Retail investment levels have remained steady through 2018 with $609.8 million invested in total. In Q3, 35 transactions worth $180.9 million were observed, a 3% decrease from Q3 of last year. This stability is reflected in cap rate expectations for strip centre retail in the Altus Investment Trends Survey where rates are expected to remain flat. Meanwhile, cap rates for single tenant retail and power centres are expected to increase. Prominent retail transactions this quarter include: Century Park Plaza (acquired for $41.8 million), Hawkstone Plaza (acquired for $29.2 million) and Broadmoor Heritage Plaza (acquired for $23 million).
The industrial sector has seen a total of $638.7 million in activity year-to-date, surpassing the total investment value of the entirety of 2017, which was $523.3 million. Q3 was up 20% from the same quarter last year with 54 transactions and a total investment value of $141.5 million. This mark was reached with only one transaction surpassing the $10 million mark, a $10.8 million deal for 3905 Allard Avenue in Leduc, purchased by York Realty. Approximately 50% of the purchasers of industrial assets are buyers who intend to utilize the property for their own business.
Edmonton has seen $570.3 million in apartment sales since the start of the year, representing a 35% increase over apartment sales to this point last year. Q3 of 2018 saw 20 apartment transactions worth a total of $90.2 million, representing an 87% increase over the same quarter last year. Coming off the results of the previous quarter, where $393 million was invested, the results this quarter are more in line with previous results seen in Q1 2018 and Q4 2017; $87 million and $78.5 million respectively.
The ICI and residential land markets in Edmonton have seen year-to-date totals of $434.7 million and $220.0 million respectively. The ICI land sector had 55 transactions in Q3 totalling $125.6 million, down from Q3 of 2017 by 15%. Residential land had 13 transactions, worth a total of $102.0 million, the highest quarterly result since Q1 2016.
“We’ve observed strong overall investment levels for two consecutive quarters in Edmonton which were bolstered by large purchases in the apartment and office sectors. These larger deals aside, the overall marketplace has been steady over the past 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.
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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