Office towers push up real estate numbers

Calgary’s commercial real estate sector experienced a banner year in 2011 with the number of investment sales and dollar volume increasing from the previous year.

And according to commercial real estate firm CBRE, activity in Calgary’s market surpassed yearover-year growth rates for across the country.

In a report, CBRE said there were 356 deals in Calgary last year for close to $2.5 billion. The number of deals were up 6.3 per cent while the dollar volume jumped by 53.2 per cent.

Across Canada, there were 4,988 deals for a total of almost $23.6 billion. Sales increased by 5.8 per cent while the dollar volume was up 20.5 per cent. In Calgary, CBRE said the increase in sales activity was largely the result of a near fourfold increase in office investment activity and all property types registered increased activity compared with 2010 with the exception of industrial.

“Improving market fundamentals are encouraging investors to get back in the game after waiting on the sidelines for much of 2009 and 2010,” said Greg Kwong, executive vice-president and regional managing director for Alberta for CBRE, in a news release. Activity this year “is expected to carry on from 2011 as investors from all levels of the capital stack look to purchase a diverse range of asset classes.”

Susan Thompson, business development manager for real estate with Calgary Economic Development, said the local investment market is strongly driven by the concentration of office towers.

“When you get a rising market, you start seeing more activity in the office towers and office towers are significantly more expensive than most other product. That’s what’s driving those numbers up,” said Thompson. “We saw quite a few office towers trade last year.”

At the national level, CBRE said a combination of rising investor confidence and the motivation by select owners to sell continued to propel the Canadian commercial real estate market back to pre-financial crisis levels.

“A broad spectrum of investors continues to be very aggressive in their pursuit of income-producing real estate that meets their investment criteria while keeping a wary eye on the ongoing events in Europe,” said John O’bryan, vice-chairman of CBRE Ltd.