Wheels in motion in Calgary real estate
The 2019 Emerging Trends in Real Estate report takes a look at trends expected in 10 Canadian cities. Here is the report’s take on Calgary’s residential, commercial and industrial real estate sectors.
The Conference Board of Canada expects Calgary’s economy to grow 2.3 percent in 2019 after hitting 2.9 percent GDP growth in 2018. Now that the city is seeing increased confidence as the oil and gas market starts its recovery, the wheels are in motion in the real estate market.
Even with increased interest rates and new mortgage rules, first-time and move-up home buyers are leading the residential charge in multifamily residences and luxury homes, respectively.
Meanwhile, millennials and younger couples are balancing the condo market. For example, the East Village is a new city-supported community development, with condo and rental accommodations alongside retail and other cultural amenities.
But Calgary’s housing market remains broadly oversupplied. Rental vacancy rates peaked at seven percent in 2016 and have gradually improved since then to the six percent range, according to the Canada Mortgage and Housing Corp.
The city’s office market remains oversupplied, as many tenants take advantage of the 23.8 percent Q2 2018 vacancy rate to move into Class A space. Downtown Class B and C assets have experienced the largest decreases in occupancy. There’s a flight to quality in office, so landlords need to get creative and are focused on developing unique, collaborative spaces targeted at millennials, startups and tech firms. For example, an older office building has been redeveloped as a dog-friendly office tower focused on attracting millennial businesses. Its unique lifestyle perks include a basketball court, a putting green, a dog spa and an outdoor dog park.
Calgary’s industrial market continues to gain momentum, showing positive absorption in 2018. But the region remains cautious, focused more on last-mile warehousing and fulfillment facilities and less on industrial.