Edmonton's office market continues to show strength and stability, says an Avison Young report.
Office vacancy in the Alberta capital has risen to 8.2% compared to 5.8% at the end of 2008, says the firms Fourth Quarter 2009 Office Summary.
As a result of the recession, many companies changed their office space utilization in a bid to become more efficient, but the market is still considered healthy entering 2010. Vacancy in many other Canadian markets will reach double figures, if it hasn't already.
These are some of the key trends noted in Avison Young’s Fourth Quarter 2009 Edmonton Office Summary, released today.
“Despite a higher vacancy rate, the Edmonton office market is still considered to be in reasonably good health,” Avison Young principal Cory Wosnack in a news release. “The past six months have seen a continued rise in the amount of available space, mostly due to the injection of numerous sublease opportunities, and we expect this trend to continue until mid-year 2010. With these new opportunities comes a more competitive marketplace amongst landlords; as a result, tenants will benefit from more creative financial incentives to lease space. This situation will cause modest downward pressure on rental rates and higher inducement packages for tenants by way of free rent and improvement allowances."
A vacancy rate of approximately 8% is considered to represent a balanced market. Downtown Edmonton overall office vacancy, which includes head lease and sublease space, increased to 6.9% from 5.2% a year ago. Absorption was negative-184,485 square feet (sf), up from 37,097 sf at this time in 2008.
Suburban office vacancy rose to 10.7% from 7.1% in the fourth quarter of 2008. Absorption was negative-21,895 sf, compared to positive absorption of 267,734 sf at the end of 2008.
Friday, December 18, 2009
Thursday, December 17, 2009
Bennett Jones anticipates CRE recovery
Law firm Bennett Jones predicts commercial real estate activity will pick up in 2010.
Toronto-based Bennett Jones, where former Bank of Canada head David Dodge, is now a senior adviser, issued comments on commercial real estate as part of a wide-ranging forecast on trends that will influence Canadian business in 2010.
"With renewed access to the public markets and improved borrowing costs, watch for an increase in activity levels by Canadian real estate entities both within Canada and internationally (particularly in emerging markets)," states the report. "Pension funds and other institutional investors will continue to seek the safe return of stable income-producing commercial real estate assets."
The outlook coincides with Dodge's prediction that Canadian economic growth will rebound to about 3.5% and the dollar will rise modestly on the strength of firming commodity prices, with the exception of natural gas, and a softening U.S. greenback. Dodge has warned that the U.S. commercial real estate market still faces a correction, he does not anticipate Dubai's economic woes to pose serious problems when it comes to raising capital for property investments.
Meanwhile, the Bennett Jones report predicts a greater proportion of restructurings and fewer outright liquidations as bank credit begins to loosen. It also anticipates more Alberta oilsands projects will get back on track, little in the way of tough new Canadian climate-change regulations while Washinton remains in "political gridlock" and more public-private-partnerships on infrastructure projects.
All of these factors will likely have at least an indirect effect on commercial real estate.
Toronto-based Bennett Jones, where former Bank of Canada head David Dodge, is now a senior adviser, issued comments on commercial real estate as part of a wide-ranging forecast on trends that will influence Canadian business in 2010.
"With renewed access to the public markets and improved borrowing costs, watch for an increase in activity levels by Canadian real estate entities both within Canada and internationally (particularly in emerging markets)," states the report. "Pension funds and other institutional investors will continue to seek the safe return of stable income-producing commercial real estate assets."
The outlook coincides with Dodge's prediction that Canadian economic growth will rebound to about 3.5% and the dollar will rise modestly on the strength of firming commodity prices, with the exception of natural gas, and a softening U.S. greenback. Dodge has warned that the U.S. commercial real estate market still faces a correction, he does not anticipate Dubai's economic woes to pose serious problems when it comes to raising capital for property investments.
Meanwhile, the Bennett Jones report predicts a greater proportion of restructurings and fewer outright liquidations as bank credit begins to loosen. It also anticipates more Alberta oilsands projects will get back on track, little in the way of tough new Canadian climate-change regulations while Washinton remains in "political gridlock" and more public-private-partnerships on infrastructure projects.
All of these factors will likely have at least an indirect effect on commercial real estate.
Tuesday, December 15, 2009
Investors showing more confidence as 2009 ends
Signs continue to point to a significant rebound in Canada's commercial real estate market in 2010.
While bloggers and tweeters in the U.S. are fretting about an impending market crash, the Canadian market is quietly moving into position for a turnaround. As 2009 comes to an end, institutional investors, especially REITs, continue to shore up their balance sheets and scout properties to purchase.
In many cases these days, the decision not to buy is based on a lack of supply, especially in in downtown Vancouver, where a new office tower is not expected to be built before 2013. Avison Young brokers predict that many investors will come off the sidelines next year as the effects of the global financial meltdown ease and they gain more clarity on their own business operations.
The general feeling, notably in Toronto and other Eastern Canadian markets, is that the worst of the recession is over. Investors will show considerably more confidence in 2010, especially if employment, considered a key commercial real estate benchmark, continues to rise.
A number of large transactions, ranging in price from $25 to $212 million are already in the works. They include Dundee REIT's announced acquisition of the 655,000-square-foot Adelaide Place office complex in Toronto for $211.5 million, which is slated to close in February.
Other pending deals range from office buildings in Vancouver, Toronto and Ottawa to large retail properties in Calgary and apartment buildings in Montreal.
The next 12 months should not break many records, especially when you consider the well documented glut of office vacancy in Calgary. But 2010 is expected to put commercial real estate investors in a better mood than they were this year.
(Follow Monte Stewart on Twitter at www.twitter.com/MonteStewart.)
While bloggers and tweeters in the U.S. are fretting about an impending market crash, the Canadian market is quietly moving into position for a turnaround. As 2009 comes to an end, institutional investors, especially REITs, continue to shore up their balance sheets and scout properties to purchase.
In many cases these days, the decision not to buy is based on a lack of supply, especially in in downtown Vancouver, where a new office tower is not expected to be built before 2013. Avison Young brokers predict that many investors will come off the sidelines next year as the effects of the global financial meltdown ease and they gain more clarity on their own business operations.
The general feeling, notably in Toronto and other Eastern Canadian markets, is that the worst of the recession is over. Investors will show considerably more confidence in 2010, especially if employment, considered a key commercial real estate benchmark, continues to rise.
A number of large transactions, ranging in price from $25 to $212 million are already in the works. They include Dundee REIT's announced acquisition of the 655,000-square-foot Adelaide Place office complex in Toronto for $211.5 million, which is slated to close in February.
Other pending deals range from office buildings in Vancouver, Toronto and Ottawa to large retail properties in Calgary and apartment buildings in Montreal.
The next 12 months should not break many records, especially when you consider the well documented glut of office vacancy in Calgary. But 2010 is expected to put commercial real estate investors in a better mood than they were this year.
(Follow Monte Stewart on Twitter at www.twitter.com/MonteStewart.)
Monday, December 7, 2009
Hutcheson to head Oxford Properties
Oxford Properties Group has appointed Blake Hutcheson as its new president and CEO.
Starting Feb. 1, he will assume the duties currently held by Michael Latimer, who has been appointed chief investment officer with Oxford's parent, OMERS.
Hutcheson was head of global real estate with Mount Kellett Capital Management, a New York-based private equity firm with offices in around the globe. Previously, he spent 14 years with CB Richard Ellis in Toronto, most recently as president of the Canadian, Latin American and Mexican operations.
Hutcheson holds an undergraduate political science degree from the University of Western Ontario, along with a masters in real estate development from Columbia University and a graduate diploma international relations and comparative politics from the London School of Economics.
Named one of Canada's Top 40 under 40 in 2000, he has sat on many boards and committees, and chaired Toronto Mayor David Miller's Fiscal Review Panel in 2008 and is currently the vice chair of Build Toronto.
He will report to Latimer.
Starting Feb. 1, he will assume the duties currently held by Michael Latimer, who has been appointed chief investment officer with Oxford's parent, OMERS.
Hutcheson was head of global real estate with Mount Kellett Capital Management, a New York-based private equity firm with offices in around the globe. Previously, he spent 14 years with CB Richard Ellis in Toronto, most recently as president of the Canadian, Latin American and Mexican operations.
Hutcheson holds an undergraduate political science degree from the University of Western Ontario, along with a masters in real estate development from Columbia University and a graduate diploma international relations and comparative politics from the London School of Economics.
Named one of Canada's Top 40 under 40 in 2000, he has sat on many boards and committees, and chaired Toronto Mayor David Miller's Fiscal Review Panel in 2008 and is currently the vice chair of Build Toronto.
He will report to Latimer.
Wednesday, December 2, 2009
Industrial land base shrinking on Vancouver's North Shore
A shrinking industrial land base on the North Shore has helped keep that sector of the commercial real estate market more stable during turbulent times, Avison Young broker Matt Thomas told the Vancouver Sun in an article published Wednesday.
Thomas said the scarcity of industrial property should keep such lots at high prices while values recover in other areas of Metro Vancouver. North Shore industrial properties average $2 million per acre compared to $4 million in Vancouver proper.
But values in other Metro Vancouver industrial submarkets have plummeted. Avison Young reported in November that industrial land values had decreased 20 to 30 per cent in other areas of Metro Vancouver and the Fraser Valley.
Thomas, Avison Young's North Shore specialist, said North Shore industrial land values "have been more stable simply because there's a lack of it and: "People will always pay top dollar for land that's in the right location."
The findings were in an Avison Young report on the North Shore commercial real estate market released Wednesday.
To see the report, click on the link below.
http://www.avisonyoung.com/library/pdf/Media_Releases/AY_North_Shore_BC_Market_Press_Release_Dec_1_09_FINAL_1.pdf
Follow Monte Stewart on Twitter at: www.twitter.com/MonteStewart
Thomas said the scarcity of industrial property should keep such lots at high prices while values recover in other areas of Metro Vancouver. North Shore industrial properties average $2 million per acre compared to $4 million in Vancouver proper.
But values in other Metro Vancouver industrial submarkets have plummeted. Avison Young reported in November that industrial land values had decreased 20 to 30 per cent in other areas of Metro Vancouver and the Fraser Valley.
Thomas, Avison Young's North Shore specialist, said North Shore industrial land values "have been more stable simply because there's a lack of it and: "People will always pay top dollar for land that's in the right location."
The findings were in an Avison Young report on the North Shore commercial real estate market released Wednesday.
To see the report, click on the link below.
http://www.avisonyoung.com/library/pdf/Media_Releases/AY_North_Shore_BC_Market_Press_Release_Dec_1_09_FINAL_1.pdf
Follow Monte Stewart on Twitter at: www.twitter.com/MonteStewart
RioCan continues to buy retail properties
Canada's largest REIT continues to make sizable retail acquisitions.
Toronto-based RioCan REIT announced Tuesday it has agreed to purchase a stake in four retail shopping centres in British Columbia and Alberta for $166 million. Under the deals expected to close at the end of the year, RioCan will purchase malls in Surrey, B.C., and Edmonton in joint ventures with CPP Investment Board and Sun Life, respectively.
RioCan will co-own Grandview Corners shopping Centre in Surrey and and the Edmonton West Retail Centre. The trust will hold 100% interests in retail centres in Lethbridge and Calgary.
“These four centres represent an excellent addition to RioCan's core portfolio and provide an opportunity to acquire a number of strategic assets while expanding our important relationships with CPPIB and Sun Life,” said Edward Sonshine, RioCan's president and CEO, in a news release.
With credit markets loosening, RioCan has arranged a five-year conventional first mortgage financing of $113 million whereby it will cover $94.5 million at a rate expected to be in the 5% range.
Last month, RioCan announced that it will spend $170 million on eight Canadian retail properties. The properties range from Ottawa to Winnipeg to Fort McMurray and offer a healthy 7.9 per cent cap rate.The move came after RioCan agreed to purchase seven grocery-anchored properties in the Northeastern U.S. as part a joint venture with U.S.-based Cedar Shopping Centers Inc. for $141 million.
Toronto-based RioCan REIT announced Tuesday it has agreed to purchase a stake in four retail shopping centres in British Columbia and Alberta for $166 million. Under the deals expected to close at the end of the year, RioCan will purchase malls in Surrey, B.C., and Edmonton in joint ventures with CPP Investment Board and Sun Life, respectively.
RioCan will co-own Grandview Corners shopping Centre in Surrey and and the Edmonton West Retail Centre. The trust will hold 100% interests in retail centres in Lethbridge and Calgary.
“These four centres represent an excellent addition to RioCan's core portfolio and provide an opportunity to acquire a number of strategic assets while expanding our important relationships with CPPIB and Sun Life,” said Edward Sonshine, RioCan's president and CEO, in a news release.
With credit markets loosening, RioCan has arranged a five-year conventional first mortgage financing of $113 million whereby it will cover $94.5 million at a rate expected to be in the 5% range.
Last month, RioCan announced that it will spend $170 million on eight Canadian retail properties. The properties range from Ottawa to Winnipeg to Fort McMurray and offer a healthy 7.9 per cent cap rate.The move came after RioCan agreed to purchase seven grocery-anchored properties in the Northeastern U.S. as part a joint venture with U.S.-based Cedar Shopping Centers Inc. for $141 million.
Tuesday, December 1, 2009
Real estate marketers embrace social networking
Traditional real estate marketing methods aren't working anymore, and
David it's time for the industry to embrace social networking, an Urban Devlopment Institute Pacific branch's heard Tuesday morning.
David Allison, principal of real estate development marketing firm Braun Allison, said developers can no longer market projects on spec, and offerings must "brand with the truth."
He was part of a panel discussion that examined how social networks are changing real estate marketing efforts.
Allison, author of the book Sell the Truth: A Marketing Campaign Guide for Real Estate Developers in the New Economy, said five key trends have emerged with the growth of online advertising.
People want more information about everything so that they can use it as "an antidote to fear." Consumers also expect dialogue with sellers, buyers are searching for authenticity, traditional advertising is less effective and social media usage is increasing.
However, real estate marketing is still about branding. All facets of a project must be based on truth, not just marketing. Real estate companies "can't pull a fast one anymore" and must help buyers win.
Allison has worked in such countries as Costa Rica and Mongolia as well as Canada and the U.S. in an advertising and marketing career that spans about 25 years. He calls for marketers to be more like journalists.
Contending the social media movement is as big as the Industrial Revolution of the late 1800s, he says websites have become the centre of the universe and traditional media support them. Likening social networking to a bar, he calls for real estate marketers to adopt a "blended media" approach to time stories, get the pulse on information campaigns and engage sales teams.
If you can sell the truth, he concluded, you can be the media.
real estate markets can "be the media."
Hanson Lok, senior research manager with polling firm Ipsos-Reid, said 85% of Canadians now have Internet access compared to 70% in 2001. But the Internet is not a real estate marketing silver bullet, and online marketing should be only one part of a blended approach.
Kirk LaPointe, managing editor of the Vancouver Sun, said online efforts have helped his publication's readership stable over the past five years.
"We don't really consider ourselves a newspaper anymore at the Vancouver Sun," said Lapointe, who uses Twitter, Facebook and LinkedIn extensively. "We're a news platform."
LaPointe said a new engagement is emerging as news deadlines effectively disappear. If the Sun works on Web content development every day, the newspaper will take care of itself.
But LaPointe worries about the quality of journalism in the future as journalists become "entrepreneurs" and learn more about search engine optimization while fewer scribes work full-time.
"Everybody's a journalist," said LaPointe, referring to the growth of social media.
He predicted word of mouth will become the most powerful method of sharing news and information in an era that is exciting and profoundly challenging for journalists.
Amie Lake, CEO of Tagga Media Inc., which markets through mobile devices, said cell phones are the future of real estate marketing. Real estate companies must have mobile-compatible websites, because more Canadians use phones than Facebook and Twitter combined.
Contending that mobile devices will ultimately spell highly-qualified leads, she called for companies to devote 10% of their media-buying budget to mobile marketing while using the devices to define their audience and learn and modify what works.
Chris Breikss, president of 6S Marketing, said social networks enable real estate firms to measure return on investment much better than they can through traditional advertising through tools like Hootsuite, Radian6, Twitalyzer, Slide Share and Google URL Builder.
He pointed to Polygon Homes and Opus Hotels as successful cases of real estate firms that have succeeded in maximizing their search engine marketing campaigns. Polygon and Opus have used Facebook and Twitter to build thousands of followers that helped boost their bottom lines.
But, perhaps, the large crowd on hand was the biggest commentary on the social media movement within real estate. When Breikss asked for a show of hands, many indicated that their firms used social networks, but they do not know about some of the technoligies that he mentioned.
Suffice to say they're willing to learn.
David it's time for the industry to embrace social networking, an Urban Devlopment Institute Pacific branch's heard Tuesday morning.
David Allison, principal of real estate development marketing firm Braun Allison, said developers can no longer market projects on spec, and offerings must "brand with the truth."
He was part of a panel discussion that examined how social networks are changing real estate marketing efforts.
Allison, author of the book Sell the Truth: A Marketing Campaign Guide for Real Estate Developers in the New Economy, said five key trends have emerged with the growth of online advertising.
People want more information about everything so that they can use it as "an antidote to fear." Consumers also expect dialogue with sellers, buyers are searching for authenticity, traditional advertising is less effective and social media usage is increasing.
However, real estate marketing is still about branding. All facets of a project must be based on truth, not just marketing. Real estate companies "can't pull a fast one anymore" and must help buyers win.
Allison has worked in such countries as Costa Rica and Mongolia as well as Canada and the U.S. in an advertising and marketing career that spans about 25 years. He calls for marketers to be more like journalists.
Contending the social media movement is as big as the Industrial Revolution of the late 1800s, he says websites have become the centre of the universe and traditional media support them. Likening social networking to a bar, he calls for real estate marketers to adopt a "blended media" approach to time stories, get the pulse on information campaigns and engage sales teams.
If you can sell the truth, he concluded, you can be the media.
real estate markets can "be the media."
Hanson Lok, senior research manager with polling firm Ipsos-Reid, said 85% of Canadians now have Internet access compared to 70% in 2001. But the Internet is not a real estate marketing silver bullet, and online marketing should be only one part of a blended approach.
Kirk LaPointe, managing editor of the Vancouver Sun, said online efforts have helped his publication's readership stable over the past five years.
"We don't really consider ourselves a newspaper anymore at the Vancouver Sun," said Lapointe, who uses Twitter, Facebook and LinkedIn extensively. "We're a news platform."
LaPointe said a new engagement is emerging as news deadlines effectively disappear. If the Sun works on Web content development every day, the newspaper will take care of itself.
But LaPointe worries about the quality of journalism in the future as journalists become "entrepreneurs" and learn more about search engine optimization while fewer scribes work full-time.
"Everybody's a journalist," said LaPointe, referring to the growth of social media.
He predicted word of mouth will become the most powerful method of sharing news and information in an era that is exciting and profoundly challenging for journalists.
Amie Lake, CEO of Tagga Media Inc., which markets through mobile devices, said cell phones are the future of real estate marketing. Real estate companies must have mobile-compatible websites, because more Canadians use phones than Facebook and Twitter combined.
Contending that mobile devices will ultimately spell highly-qualified leads, she called for companies to devote 10% of their media-buying budget to mobile marketing while using the devices to define their audience and learn and modify what works.
Chris Breikss, president of 6S Marketing, said social networks enable real estate firms to measure return on investment much better than they can through traditional advertising through tools like Hootsuite, Radian6, Twitalyzer, Slide Share and Google URL Builder.
He pointed to Polygon Homes and Opus Hotels as successful cases of real estate firms that have succeeded in maximizing their search engine marketing campaigns. Polygon and Opus have used Facebook and Twitter to build thousands of followers that helped boost their bottom lines.
But, perhaps, the large crowd on hand was the biggest commentary on the social media movement within real estate. When Breikss asked for a show of hands, many indicated that their firms used social networks, but they do not know about some of the technoligies that he mentioned.
Suffice to say they're willing to learn.
Subscribe to:
Posts (Atom)
