BEST QUARTER EVER
‘Densification’ helps fuel recovery
Investment in Edmonton’s multifamily residential rental and industrial market helped fuel a record-breaking quarter in 2018 as the province continues to claw its way out of recession.
According to data released by CBRE Limited, Edmonton had its best quarter ever in Q2 this year, recording $1.49 billion in commercial real estate investments, representing a 51 per cent increase from the previous quarterly record of $994 million set in the fourth quarter of 2016.
This brings Edmonton’s first half investment total to $2.07 billion, which is an all-time high for a halfyear period and up from the previous record of $1.7 billion set in the second half of 2016.
Dave Young, executive vicepresident with CBRE Limited, said Friday the growth in investment in the multi-family market is being spurred on by consumers looking for high quality apartment buildings, especially downtown.
“We’re starting to see a transition from old to new,” Young said. “If you look at the inventory of apartment buildings, a lot of that was built from the mid-1950s to maybe the early-1980s, so you have a lot of older stock out there and it’s not giving what tenants are demanding.”
Tenants are looking for newer amenities that older apartment buildings don’t have, such as en suite laundry, and developers are beginning to take advantage of that demand.
Ice District has helped to fuel the demand within the downtown core, Young said, but it’s also about a shift in mindset.
“It’s urbanization, it’s densification. In terms of transportation patterns, in terms of traffic and in terms of transit, everything is focused on an urban lifestyle and we’re finally getting to see that,” said Young, citing The Hendrix apartment building, 9733 111 St., as an example.
“Ice District, for sure, has had an impact on our downtown core for the positive, but you also look at 104 Street from basically 100 Avenue all the way to 104 Avenue, there’s downtown urban living there that wasn’t there when I got into this business in 1990.”
There is still some demand for development around the Anthony Henday, Young says, but it’s not as active as downtown.
OUT WITH THE OLD
The demand for higher quality buildings is also being felt in industrial markets.
Tenants are really demanding more functional space and are being more strategic where they invest, Young said. Vacancy rates remain healthy, but the majority of future vacancies will be in older industrial buildings that just aren’t as adaptive.
“It’s kind of like the old apartment buildings where you see tenants getting sucked out into the new ones, the same thing is happening in the industrial buildings,” Young said. “The days of a 19-foot distribution building just off 142 Street and the Yellowhead, they ’re gone.”