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.

Shell upgrader property gets carbon-capture funding

Ottawa and the Alberta government have promised $865-million to help oil major Royal Dutch Shell PLC develop carbon capture and storage at its oilsands processing plant near Edmonton.
In a letter of intent, the governments pledged to spend the money over 15 years on the project, which Shell said has a total estimated cost of $1.35-billion. The funding comes as governments across Canada seek to meet emission-reduction goals, curb global warming and preserve oil and gas investment.
Alberta has indicated it will contribute $745-million and Ottawa will kick in $120-million for the Quest project at Shell's Scotford upgrader.
Shell, the world's second-largest non-state oil company, is still in the early stages of developing Quest, which would start storing emissions from the plant underground by the end of 2015, Shell vice-president Graham Boje said.
“There's a couple of years of work ahead of us. There's a lot more technical work to do, and then there's also the regulatory application process and approval process, as well as consultation with people in the area,” Boje told reporters.
The government support may serve as forerunner of future funding of carbon-capture systems on large industrial projects.

For more details, check out this story in The Globe and Mail.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/ottawa-alberta-to-fund-carbon-capture-project/article1317268/