FROM GORDON KENT OF THE EDMONTON JOURNAL ON FEB 25. 2016
Alberta’s sagging economy is being blamed for a 35 per cent drop in the value of commercial real estate sold in Edmonton last year.
The total value of commercial land and buildings sold in the city in 2015 was $1.5 billion, down $800 million from $2.3 billion the previous year, according to figures released Thursday.
“The dramatic drop in world oil prices set the stage for a much weaker year economically within the Edmonton area and this is reflected in the decline in activity,” says a market overview by The Network, a commercial sales database company.
“This represents the second-lowest volume of activity over the past 10 years, only exceeding 2009, where sales volume was just over $1.1 billion.”
Major commercial centres were particularly hard hit. The sales value of such facilities as office buildings and shopping centres sank to $237 million last year from $555 million the previous year and $1.1 billion in 2011,
Vacancies are growing and lease rates shrinking, a situation expected to become worse when three downtown office towers under construction are finished.
One of the few bright spots was in the field of apartments, walkups and row houses, where the $329 million worth of sales was virtually unchanged from 2014 and prices per suite were about four per cent higher.
But The Network expects weakness to continue and thinks 2016 will likely be on par with 2009, the low point in the last 2008-10 downturn.
“Once again, recovery in the market will remain contingent upon a recovery in world oil prices.”