The level of investment in Edmonton’s commercial real estate industry in the first half of this year is down significantly compared with a year ago.
A new report by Altus Group, a leading provider of software, data solutions and independent advisory services to the commercial real estate industry, said close to $419 million in commercial sales were recorded in the second quarter, bringing the year-to-date total to $1.1 billion, a decrease of 41 per cent from the first half of 2018.
Second-quarter volumes represented a decrease of 62 per cent from the same quarter last year and the third straight quarter of decline from the high mark set in third quarter of 2018, said the company.
The drop in commercial investment comes at a time when Edmonton exhibited an uptick in investor preference in the second quarter, according to the Altus Group Investment Trends Survey.
“The trend demonstrates that ‘opportunity’ purchases continue to drive the market as investors target higher yields in undervalued assets located in well-serviced areas, unlocking potential through redevelopment plays. The improvement also defies the economic uncertainty that the market has been facing this year,” said Altus.
“Overall the majority of sectors experienced declines in transaction volume in the second quarter from the same quarter last year. The only sector posting an increase in quarter two was ICI land, which was up 17 per cent year-over-year; however, this sector is down 37 per cent year-to-date compared to the first half of last year. ICI land recorded 66 transactions worth a total of $123 million this quarter and most of the top transactions in this category were acquired by end-users.”
The report said the apartment sector led the way in market share for the second quarter with 27 transactions worth close to $130 million, which represents a 31 per cent share of market activity. The apartment sector experienced a year-to-date decline of 35 per cent compared to the first half of 2018.
Altus said the industrial sector had the third highest market share of the second quarter representing 19 per cent of all transaction volume with 32 industrial transactions worth a total of $81 million. This represents a decline of 73 per cent from the same quarter last year, and a decrease by 47 per cent year-to-date compared to the first half of 2018, it said.
“While the market has experienced declining investment volumes since mid-2018, the apartment and industrial sectors continue to be the preferred asset classes, providing reasonable returns while servicing a continued demand from users,” said Ben Tatterton, manager of data solutions at Altus Group.
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