Calgary commercial activity continues upward

Calgary commercial real estate transaction activity is likely to continue upward as property values adjust to the new equilibrium and the bid-ask gap narrows, says an Avison Young report released Monday.
"While both the number of transactions and total dollar volume are down, activity levels and values are reflecting quality, not quanty," says the report.
The average price per transaction has only declined 1.5% versus the 10-year average and 2.7% versus the five-year average.
Overall transaction volume for six asset classes (office, retail, industrial, ICI land, and residential land) for 2009 was $1.42 billion from 127 sales. Dollar volume dropped 58% from 2009 and 69% from 2007.
Retail properties accounted for the largest dollar volume share (36%) in 2009 while industrial led in number of sales (28%).
"Knowledgeable, well-capitalized buyers are actively looking for quality products with long-term leases and good-quality tenants," says the report. "There are a number of positive factors within the investment market today."
For the first time in more than a decade, office deals took a backseat to retail transactions. Office transactions dropped 59% to 15 from 37 while office dollar volume dipped 70% to $377.8 million from $1.2 billion in 2008. The average sale price dropped to $25.2 million, or $254 per square foot (psf) from $33.5 million in 2008 and $39.8 million in 2007.
Office vacancy finished the year at 11.6%, compared to 6% at the end of 2008.
Meanwhile, 28 retail property transactions valued at $509 in 2009 were "highly comparable" to 28 worth $540 million in 2008.
However, Calgary's industrial market experienced one of its slowest years in the past five as 35 transactions valued at $228 million were completed. Industrial dollar volume was off the record-setting pace of 2008 and 2007 while vacancy reached 10.6% at the end of 2009, up slightly from the third quarter and up significantly from 7.8% at the end of 2008.