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.
Monday, March 29, 2010
Thursday, March 11, 2010
NAIOP panelists to assess recovering market
How can commercial real estate developers profit from the current economic recovery?
NAIOP Vancouver members will attempt to answer that question during this month's breakfast meeting, March 18 at the Hyatt Regency.
The panel will discuss the market's current and future prospects in wake of the global economic downturn and examine ways to profit heading into the next expansion phase. It should be a lively discussion, because the Vancouver market is extremely active right now with many deals in the works, especially in retail, which made a strong comeback in the second half of 2009 following a slow start to the year.
Bill Tucker, CEO of Omicron Canada Inc., which assists developers from design to construction and offers such services as architecture and engineering, will serve as the moderator. The panelists include Gino Nonni, president of Wesgroup Properties; Ron Emerson, president of Emerson Real Estate Group and Andrew Grant, president of PCI Group.
Wesgroup and PCI Group are two of Metro Vancouver's most active and prominent developers.
For more details NAIOP's monthly breakfast, click on the link below:
http://www.naiopvcr.com/eventCalendar.aspx#e38
NAIOP Vancouver members will attempt to answer that question during this month's breakfast meeting, March 18 at the Hyatt Regency.
The panel will discuss the market's current and future prospects in wake of the global economic downturn and examine ways to profit heading into the next expansion phase. It should be a lively discussion, because the Vancouver market is extremely active right now with many deals in the works, especially in retail, which made a strong comeback in the second half of 2009 following a slow start to the year.
Bill Tucker, CEO of Omicron Canada Inc., which assists developers from design to construction and offers such services as architecture and engineering, will serve as the moderator. The panelists include Gino Nonni, president of Wesgroup Properties; Ron Emerson, president of Emerson Real Estate Group and Andrew Grant, president of PCI Group.
Wesgroup and PCI Group are two of Metro Vancouver's most active and prominent developers.
For more details NAIOP's monthly breakfast, click on the link below:
http://www.naiopvcr.com/eventCalendar.aspx#e38
Tuesday, March 9, 2010
Former Watergate investigator joins Avison Young
Legendary commercial real estate executive Stephen Leopold has returned to his Quebec roots.
Avison Young announced Tuesday that Leopold has been appointed chair of the brokerage firm's Quebec operations.
Leopold, whose career spans four decades, will advise on strategy and growth in the Quebec marketplace.
In the 1970s, he served as an investigator on U.S. Senator Sam Ervin's Watergate Committee, which investigated former president Richard Nixon. In the 1980s, Leopold, a Montreal native, acted as executive assistant to Brian Mulroney during a successful Progressive Conservative Party leadership campaign that helped him become prime minister.
Leopold's many commercial real estate career highlights include serving as vice-president of Canada's largest mortgage bank, now known as RBC Capital; forming his own firm, Montreal-based Leopold Property Consultants, which became the largest North American company to represent corporate users of space; and conceiving and creating Skymarkets in the World Trade Center. In 2002, he was appointed chairman of William B. May International in New York, which was founded in 1866 and ranks as one of North America's oldest brokerages.
Avison Young chair and CEO Mark Rose says Leopold's appointment is part of the company's aggressive expansion plan and demonstrates its increasingly significant presence in North America.
Leopold will be based in Avison Young's Montreal office.
Avison Young announced Tuesday that Leopold has been appointed chair of the brokerage firm's Quebec operations.
Leopold, whose career spans four decades, will advise on strategy and growth in the Quebec marketplace.
In the 1970s, he served as an investigator on U.S. Senator Sam Ervin's Watergate Committee, which investigated former president Richard Nixon. In the 1980s, Leopold, a Montreal native, acted as executive assistant to Brian Mulroney during a successful Progressive Conservative Party leadership campaign that helped him become prime minister.
Leopold's many commercial real estate career highlights include serving as vice-president of Canada's largest mortgage bank, now known as RBC Capital; forming his own firm, Montreal-based Leopold Property Consultants, which became the largest North American company to represent corporate users of space; and conceiving and creating Skymarkets in the World Trade Center. In 2002, he was appointed chairman of William B. May International in New York, which was founded in 1866 and ranks as one of North America's oldest brokerages.
Avison Young chair and CEO Mark Rose says Leopold's appointment is part of the company's aggressive expansion plan and demonstrates its increasingly significant presence in North America.
Leopold will be based in Avison Young's Montreal office.
Monday, February 22, 2010
B.C. investment volume rises over low cap rates
British Columbia's commercial real estate investment market made a strong comeback in the second half of 2009, says a new Avison Young report.
The number of transactions increased to 37 from 23 in the first half, which at the time marked the lowest first-half total in seven years. Meanwhile, second-half investment volume rose 11% to $715 million from $643 million in the earlier period, the report adds. Total investment for the year reached $1.36 billion, up from $1.27 billion in all of 2008, when provincial investment activity was caught in the global economic downturn.
The report attributes the increases mainly to a narrowing of the bid-ask gap as the effects of the worldwide downturn and U.S. credit crisis subside further.
Retail deals spurred the second-half 2009 comeback after lagging in the first six months. A total of 16 retail deals were completed in the second half compared to four in the first half. Remaining second-half trades were split evenly between office (11) and industrial (10).
For the year, total trades dropped to 60 from 68.
In the second half of 2009, retail investment volume accounted for $64%, or $458 million, compared to a modest 6% ($41 million) in the first half. Following a 70% drop, office deals accounted for $154 million as opposed to $506 million in the first half.
The large decrease resulted because large Downtown Vancouver office deals similar to Bentall V ($297 million) and the Grosvenor building ($84 million) did not repeat in the second half.
Industrial volume rose slightly to $102 million in the final six months of 2009.
Looking at 2009 as a whole, deals were evenly split between office (19), retail (20) and industrial (21). Office deals comprised 49%, or $660 million, of volume while retail accounted for 37% ($499 million) of volume and industrial represented 15% ($199 million).
The year-over-year increase in sales volume occurred even though the province's traditionally low capitalization rates nudged downward.
And, they are expected to continue on that course.
The number of transactions increased to 37 from 23 in the first half, which at the time marked the lowest first-half total in seven years. Meanwhile, second-half investment volume rose 11% to $715 million from $643 million in the earlier period, the report adds. Total investment for the year reached $1.36 billion, up from $1.27 billion in all of 2008, when provincial investment activity was caught in the global economic downturn.
The report attributes the increases mainly to a narrowing of the bid-ask gap as the effects of the worldwide downturn and U.S. credit crisis subside further.
Retail deals spurred the second-half 2009 comeback after lagging in the first six months. A total of 16 retail deals were completed in the second half compared to four in the first half. Remaining second-half trades were split evenly between office (11) and industrial (10).
For the year, total trades dropped to 60 from 68.
In the second half of 2009, retail investment volume accounted for $64%, or $458 million, compared to a modest 6% ($41 million) in the first half. Following a 70% drop, office deals accounted for $154 million as opposed to $506 million in the first half.
The large decrease resulted because large Downtown Vancouver office deals similar to Bentall V ($297 million) and the Grosvenor building ($84 million) did not repeat in the second half.
Industrial volume rose slightly to $102 million in the final six months of 2009.
Looking at 2009 as a whole, deals were evenly split between office (19), retail (20) and industrial (21). Office deals comprised 49%, or $660 million, of volume while retail accounted for 37% ($499 million) of volume and industrial represented 15% ($199 million).
The year-over-year increase in sales volume occurred even though the province's traditionally low capitalization rates nudged downward.
And, they are expected to continue on that course.
Thursday, January 21, 2010
Segal recalls Olympia and York and Block Bros.
It’s not a well known fact, but Joe Segal briefly owned a real estate brokerage business in the late 1980s.
During NAIOP Vancouver’s monthly breakfast meeting on Thursday, the legendary entrepreneur, philanthropist and real estate investor became interested in a group of properties owned by Olympia & York, then one of Canada’s dominant developers. Figuring that O&Y had lost interest in them, he put in a call to Alberta Reichmann, one of three brothers who founded the company.
The 18 income properties weren’t on the market at the time, but Reichmann was willing to listen to what Segal might offer, so Segal went to Toronto to see him. The potential acquisition included Block Bros., then a booming residential real estate brokerage.
Reichmann told his company’s vice-president to tell Segal “anything and everything” he wanted to know about Block Bros. Segal said he would come back in two weeks to talk with Reichmann again.
But Segal, knowing he could not get through all of the properties in two weeks, did not look at any of them.
“But I really didn’t care,” said Segal. “All was interested in, all the valuation, was in the income stream.”
He did some number crunching and eventually offered Reichmann $140 million.
“I said, ‘I’ll give you $140 million . . . or I’ll give you $145 million if you keep the brokerage business,’ ” said Segal.
Reichmann rejected that pitch and asked for $145 million – brokerage business included. Segal agreed.
Segal’s next step was to get financing. He called the president of his long-time bank and requested $100 million.
His plan was to pay the bank back through the sale of the properties. But the bank boss said Segal would have to wait six weeks until he and the board assessed the proposal.
So Segal went to Canada Trust, made the same offer to its president, who said approval would take six days or so. Segal set the second bank boss in motion, got his money, and then sold Block Bros. back to its president and brokers for $5 million.
It took Segal a year to pay back his $100 million loan. A few years later, Block Bros. and O&Y both went bust while Segal continued to build a commercial real estate portfolio now worth hundreds of millions.
The year was 1988, but with the credit markets still tight, investors developing deals today can probably relate to what Segal went through.
I wonder where that bank president who told Segal to wait six weeks is now . . .
During NAIOP Vancouver’s monthly breakfast meeting on Thursday, the legendary entrepreneur, philanthropist and real estate investor became interested in a group of properties owned by Olympia & York, then one of Canada’s dominant developers. Figuring that O&Y had lost interest in them, he put in a call to Alberta Reichmann, one of three brothers who founded the company.
The 18 income properties weren’t on the market at the time, but Reichmann was willing to listen to what Segal might offer, so Segal went to Toronto to see him. The potential acquisition included Block Bros., then a booming residential real estate brokerage.
Reichmann told his company’s vice-president to tell Segal “anything and everything” he wanted to know about Block Bros. Segal said he would come back in two weeks to talk with Reichmann again.
But Segal, knowing he could not get through all of the properties in two weeks, did not look at any of them.
“But I really didn’t care,” said Segal. “All was interested in, all the valuation, was in the income stream.”
He did some number crunching and eventually offered Reichmann $140 million.
“I said, ‘I’ll give you $140 million . . . or I’ll give you $145 million if you keep the brokerage business,’ ” said Segal.
Reichmann rejected that pitch and asked for $145 million – brokerage business included. Segal agreed.
Segal’s next step was to get financing. He called the president of his long-time bank and requested $100 million.
His plan was to pay the bank back through the sale of the properties. But the bank boss said Segal would have to wait six weeks until he and the board assessed the proposal.
So Segal went to Canada Trust, made the same offer to its president, who said approval would take six days or so. Segal set the second bank boss in motion, got his money, and then sold Block Bros. back to its president and brokers for $5 million.
It took Segal a year to pay back his $100 million loan. A few years later, Block Bros. and O&Y both went bust while Segal continued to build a commercial real estate portfolio now worth hundreds of millions.
The year was 1988, but with the credit markets still tight, investors developing deals today can probably relate to what Segal went through.
I wonder where that bank president who told Segal to wait six weeks is now . . .
Segal expresses confidence in B.C. economy
Legendary entrepreneur Joe Segal isn’t worried about the B.C. economy these days.
While the global, national and provincial economies struggled in the past year, Segal’s Kingswood Capital firm has invested more than $150 million in commercial real estate.
“We’re going to be okay in British Columbia,” said Segal during a question-and-answer session at NAIOP Vancouver’s monthly breakfast. “But if the rest of the world goes bad, we’ll go bad, too – because we’re not an island.”
When asked if he is still a buyer, Segal said the answer depends on a particular property listing.
If the zoning is right, if the economy is right, if the property is right and the price is right, we’re buyers,” said Segal.
Around the time Segal was making his second request at a NAIOP breakfast in the past three months, comments, Bank of Canada boss Mark Carney told an Ottawa news conference that the country’s recovery is becoming more solidly entrenched. However, there won't be a sharp rebound in job growth for some time.
"Economic growth is expected to become more solidly entrenched over the projection period as self-sustaining growth in private demand takes hold," the bank said as part of its quarterly update.
Meanwhile, the bank said bankruptcies declined by four per cent in November from October. But the bank is also predicting the economy will grow by 4.3% this spring. On an annual basis, grow is expected to average 2.9% this year and 3.5% in 2011.
Which probably explains, at least in part, why Joe Segal isn't overly worried about his home province's economy as 2010 unfolds.
While the global, national and provincial economies struggled in the past year, Segal’s Kingswood Capital firm has invested more than $150 million in commercial real estate.
“We’re going to be okay in British Columbia,” said Segal during a question-and-answer session at NAIOP Vancouver’s monthly breakfast. “But if the rest of the world goes bad, we’ll go bad, too – because we’re not an island.”
When asked if he is still a buyer, Segal said the answer depends on a particular property listing.
If the zoning is right, if the economy is right, if the property is right and the price is right, we’re buyers,” said Segal.
Around the time Segal was making his second request at a NAIOP breakfast in the past three months, comments, Bank of Canada boss Mark Carney told an Ottawa news conference that the country’s recovery is becoming more solidly entrenched. However, there won't be a sharp rebound in job growth for some time.
"Economic growth is expected to become more solidly entrenched over the projection period as self-sustaining growth in private demand takes hold," the bank said as part of its quarterly update.
Meanwhile, the bank said bankruptcies declined by four per cent in November from October. But the bank is also predicting the economy will grow by 4.3% this spring. On an annual basis, grow is expected to average 2.9% this year and 3.5% in 2011.
Which probably explains, at least in part, why Joe Segal isn't overly worried about his home province's economy as 2010 unfolds.
Wednesday, January 13, 2010
Canadian real estate investment set to climb
Canada's commercial real estate investment market is expected to pick up in 2010.
Avison Young's 2010 Forecast says investment transaction volume dropped 55% to $5.4 billion in the first nine months of last year. Simply put, owners were reluctant to sell their assets at de-valued rates, so they held on to them instead.
Although 2010 is not expected to set any investment records, investors may face more pressure to make moves this year as the economy improves and REITs re-enter the market. Vancouver, Calgary and Montreal are among the cities expected to experience increases.
But Toronto will be a notable exception. Brokers there believe that rents still have to complete an adjustment, and in some cases decline further.
Still, at least two REITS, ARTIS out of Winnipeg and Toronto-based Dundee, have been extremely active in late 2009 and early 2010.
Avison Young's 2010 Forecast says investment transaction volume dropped 55% to $5.4 billion in the first nine months of last year. Simply put, owners were reluctant to sell their assets at de-valued rates, so they held on to them instead.
Although 2010 is not expected to set any investment records, investors may face more pressure to make moves this year as the economy improves and REITs re-enter the market. Vancouver, Calgary and Montreal are among the cities expected to experience increases.
But Toronto will be a notable exception. Brokers there believe that rents still have to complete an adjustment, and in some cases decline further.
Still, at least two REITS, ARTIS out of Winnipeg and Toronto-based Dundee, have been extremely active in late 2009 and early 2010.
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