Year Over Year Growth in Commercial Real Estate for Edmonton Market Area
830 transactions over $500,000 were registered in 2018, representing a total investment value of $3.99 billion, up 39% from 2017
EDMONTON ‒ Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, today announced the year end results for commercial real estate investment in the Edmonton market area for 2018. Commercial sales volumes increased to $3.99 billion in 2018, up from $2.88 billion in 2017. Q4 amounted to $906 million of investment activity. Transaction counts also increased in 2018 with 830 transactions, compared to 744 in 2017. Combined investment activity for the year amounted to a 39% increase over 2017.
The Altus Investment Trends Survey indications for Q4 showed mixed results regarding the anticipated direction of capitalization rates across all asset classes. Downtown office cap rates are on the rise with new office construction projects coming to market and a string of underperforming assets being converted to different uses. Meanwhile, industrial and retail cap rates are generally trending downward, as demand for well positioned logistics centres and multi-tenant retail has continued to show strong demand from investors.
Three asset classes, apartment, industrial, and retail contributed to 62% of the total dollar volume for the year.
(Edmonton Property Transactions – All Sectors by Quarter)
The office sector saw 53 transactions and a total of $550 million in investment, a 37% increase over 2017. Much of this increase can be attributed to one transaction that surpassed all others in 2018; Edmonton Tower, a 631,000 square foot building, sold for $400 million to Aimco. This transaction accounted for 73% of all office investments through the year. Demonstrating the lack of office investment aside from this purchase, the second largest transaction of the year amounted to $22 million. This was the sale of the Enbridge tower, which is an office-to-hotel conversion by Lighthouse Hospitality.
Retail sales were strong in 2018 with overall investment increasing by 31% over 2017. The purchase of Village Landing in St. Albert by the Jim Pattison Group in Q4 was the largest transaction of the year for retail at $51.2 million. Other notable transactions rounding out the top three include Century Park Plaza, which sold for $41.8 million to Supreme Capital, and Westland Market Mall, which sold for $35.5 million to Cristall Group Investments.
The apartment sector saw 83 transactions, worth $849 million, an increase of 69% over 2017. Two of the top 5 apartment transactions were in Q4; The Hendrix, a 260-unit tower acquired by GWL for $96.1 million and The Pinnacle, 249-unit tower acquired by Timbercreek for $67.3 million.
The industrial sector which saw 220 transactions, worth $841 million, an increase of 61% from the previous year. Warehouse and distribution centre portfolios were the main drivers of transaction activity with major buyers being a mix of REITs, local private capital, and owner/users. The top transaction of the year was the Sunwapta Business Centre, a three building portfolio acquired by Fiera Properties for $63 million.
“The annual results indicate a significant improvement over the previous year, however, it should be noted that one large transaction in the office sector and several apartment sales that were agreed upon at a prior date, bolstered the totals seen in 2018. Nevertheless, the interest in the market from various types of purchasers seen through 2018 is a positive note, and will probably continue in 2019” 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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