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Calgary real estate predicted to moderate this year, with hot spring demand – Calgary Herald

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Homes listed above $600,000 are starting to see sales and prices pick up

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The forecast is calling for hotter conditions — only not as heated as this past spring.

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That’s not a prediction about the weather. Rather it’s a forecast for Calgary resale real estate prices.

Royal LePage recently released its Housing Price Survey and Market Forecast predicting home prices and sales across Canada will remain strong throughout the rest of the year — just not as heated as the sizzling hot markets seen in spring.

“It’s not sustainable,” says Corinne Lyall, broker/owner of Royal LePage Benchmark in Calgary, about sales and price growth that occurred in the second quarter.

As the report notes, from April to the end of June, the aggregate price of home in the city increased by 9.7 per cent year over year to $568,500, a record high.

The price acceleration was driven by record sales, including an all-time resale record for any month, set in April of more than 3,200 homes, Calgary Real Estate Board figures show.

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Driving the market in the second quarter were single-family detached home sales. The median price for this housing type grew by more than 10 per cent year over year to $638,000, the study found.

Yet even the sagging condominium market saw growth, jumping by 4.1 per cent over the same span in 2020 to $226,000.

“One thing were are seeing is a bigger impact in the $600,000-plus whereas, years previous, all the sales were under $500,000,” Lyall says. “This is the first year I can remember since 2014 that we actually saw sales grow and an increase in price (in this range) because people were competing for these properties.”

Price growth has been even stronger nationally, the report notes, with the aggregate price of a home rising by about 25 per cent in the second quarter over the same period in 2020 to $727,000.

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In fact, 89 per cent of regions surveyed saw double-digit percentage gains. Royal LePage forecasts sales will remain strong for the year, driving prices higher — just not at the pace seen in the spring.

The aggregate price nationally is expected to grow to more than $771,000, up 16 per cent from the end of last year. Montreal is forecast to be the hottest market with a year over year price gain of 17.5 per cent.

Calgary is also projected to see price growth, though more moderate at 7.5 per cent, year over year.

Veteran realtor Wendy Morrow with Real Estate Professional Inc. in Calgary says the price growth amid the pandemic is hardly surprising, given rising demand and limited supply.

“Inflation has risen above what we expected this spring and summer due to pent up demand,” she says.

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But this problem is not unique to real estate, she adds. Inflation is rising throughout the economy due to bottleneck supply issues.

Yet supply in the resale market should grow in the months ahead, Morrow says. “This will soften the real estate market prices somewhat.”

Still, uncertainty remains with COVID variants and vaccine rollout, among other concerns like job growth.

“None of us have a crystal ball as to what will happen,” Lyall adds.

What is certain is the city remains an attractive place to call home, she says.

“Calgary is a great place to raise kids, be close to the mountains… and so there’s a really great lifestyle here that a lot of people are attracted to.”

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Podcast: Raising capital for commercial and industrial real estate | RENX – Real Estate News EXchange

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The Industrial Real Estate Show with Chad Griffiths.

Can you raise outside capital to purchase commercial real estate? What if you don’t come from a business-minded family or have a circle of affluent friends?

In this episode Griffiths is joined by Whitney Sewell, founder and CEO of Life Bridge Capital, a private firm with over $125M in assets under management.

Sewell shares how he started with small projects and now raises upwards of $10 million per project in a few hours. He also offers a number of actionable steps investors can take right now to raise capital, and why he is working so diligently toward accomplishing his goals.

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The Daily Chase: Toronto real estate broker laughs at housing pledges; Fed decision day – BNN

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Toronto real estate broker John Pasalis laughed at Greg when asked about campaign housing pledges and whether any of them make sense for addressing affordability. Check out that refreshingly candid reaction, and why Pasalis (like many other guests we’ve spoken with) fears the Liberals’ strategy will backfire and actually drive up prices. Mattamy Homes Founder Peter Gilgan was even more blunt, telling us “we need to declare that we’re at war with affordability.” We’ll have plenty more insight in the days ahead about what to expect in Justin Trudeau’s third mandate, including this afternoon when CAPREIT CEO Mark Kenney joins Greg to discuss the Liberals’ targeting of real estate investment trusts. We’ll note here that the Prime Minister’s Office released a readout yesterday evening from Trudeau’s call with U.S. President Joe Biden; the two “committed to getting together in person soon.”

FED DAY

Markets will find out this afternoon if the U.S. Federal Reserve is prepared to fine-tune its language about taper timing. Last we heard from Chair Jerome Powell in his Jackson Hole speech, he confirmed that the central bank thinks it will be in a position to scale back asset purchases before the end of this year, but signaled “considerable” progress was still needed to attain maximum employment. Since then, we saw August non-farm payrolls that fell way short of expectations. The policy statement and updated forecasts land at 2 p.m.; followed by Powell’s news conference a half hour later.

EVERGRANDE WATCH

The debt-laden Chinese property developer that’s captured the financial world’s attention amid concern (seemingly misplaced, at least for now) that it could be heading toward a Lehman moment has managed to assuage some immediate fear, while simultaneously stirring confusion. China Evergrande Group said in a regulatory filing that it “resolved” an interest payment coming due tomorrow, without providing many details. Meanwhile, less than 24 hours ago, Bloomberg Intelligence Analyst Damian Sassower told us the big question surrounding Evergrande was what the People’s Bank of China was prepared to do about it. Overnight, it pumped additional liquidity into the financial system in a reverse repo operation. That all added up to a steady session in Asia, where the Shanghai Composite closed flat after a two-day holiday.

OTHER NOTABLE STORIES

  • FedEx had a rough fiscal first quarter as profit fell year-over-year amid supply chain woes and a US$450-million jump in costs due to what the company calls a “constrained labour market.” The parcel shipper cut its full-year profit forecast as a result. Shares have been down more than five per cent in pre-market trading.
  • The U.S. House of Representatives cleared the SAFE Banking Act last night, meaning the U.S. cannabis industry is one step closer to freer access to banking services.
  • Celestica announced last night that it’s paying US$306 million to acquire Singapore-based electronics manufacturer PCI Limited. Celestica, which also raised its profit forecast, said the deal will add more than 20 “blue-chip” customers to its business. CEO Rob Mionis is on The Open at 10:10 a.m.
  • Telus International announced a secondary offering of 12 million shares after yesterday’s closing bell. None of the proceeds are flowing to the company. TIXT shares have surged almost 22 per cent since their first day of trading in February.
  • Walt Disney Co. shares have steadied in pre-market trading after an abrupt five per cent plunge yesterday afternoon on the heels of a management warning about Disney+ subscriber additions this quarter.
  • Reminder that Ontario’s COVID vaccine passport program takes effect today, forcing venues including restaurants, bars, and movie theatres to screen patrons for full vaccination.

NOTABLE RELEASES/EVENTS

  • Notable data: Canadian manufacturing sales flash estimate, U.S. existing home sales
  • Notable earnings: BlackBerry, General Mills
  • 8:30: Wheaton Precious Metals investor day
  • 9:10: Suncor Energy East Coast Vice-President Josee Tremblay addresses Newfoundland and Labrador Oil and Gas Industries Association conference
  • 10:00: Ontario Superior Court resumes hearing Cineworld-Cineplex case
  • 11:00: U.S. President Joe Biden convenes virtual COVID summit on sidelines of United Nations General Assembly
  • 14:00: U.S. Federal Reserve releases interest rate decision and updated forecasts (plus 14:30 news conference)
  • Canadian Council for Aboriginal Business hosts virtual conference on rebuilding the Indigenous economy. Speakers include Suncor Energy CEO Mark Little (12:45)

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Artis REIT puts Calgary office portfolio up for sale | RENX – Real Estate News EXchange

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IMAGE: Artis REIT is marketing the remaining six buildings in its Calgary office portfolio. (Courtesy Artis REIT)

Artis REIT is marketing the remaining six buildings in its Calgary office portfolio. (Courtesy Artis REIT)

Artis Real Estate Investment Trust is selling the remainder of its Calgary office portfolio which includes six buildings comprising close to 700,000 square feet.

It is part of the REIT’s overall strategy of divesting Calgary office property, which began in late 2016, to concentrate on other real estate assets.

At its peak in mid to late 2016, just prior to its shift in its strategy, Artis (AX-UN-T) owned in excess of 2.5 million square feet of office property in Calgary across approximately 20 properties.

“Artis pursued a significant portfolio shift away from Calgary office to prioritize capital allocation to higher-growth strategies, particularly emphasizing the U.S.A. industrial development program,” said Corey Colville, head of strategy, real estate, at Artis.

The Calgary portfolio for sale includes:

Canadian Centre, 156,772 square feet;
417 14th Street building, 17,517 square feet;
Alex Building, 61,847 square feet;
Campana Place, 49,123 square feet;
Heritage Square, 315,152 square feet;
– and Hillhurst Building, 63,394 square feet.

Colville said the present occupancy of the Calgary office portfolio is about 70 per cent.

“Strategic decision” to exit Calgary office sector

“We still have a very robust portfolio of retail and industrial properties in Calgary, but we’ve made this strategic decision to market our remaining Calgary office buildings,” said Colville.

Artis has five retail properties in Calgary of over 343,000 square feet and six industrial properties with over 362,000 square feet.

“Over the past trailing few years, Artis has marketed and successfully transacted on much of their Calgary office portfolio. These remaining six assets, we’re of the view that there’s a terrific opportunity for the market to capitalize on a substantial discount (to) replacement cost and create significant value,” said Colville.

“We’ve had interest from owner/user investors, from repositioning and converter investors as well as office investors.

“With these properties, we think with the amount of potential there’s just fundamentally an opportunity in the market for local investors to capitalize on.”

Colville said Artis has held some of the Calgary office assets for more than a decade. On balance, they’ve been longer-tenured assets for Artis.

“At the peak, (Calgary office) was a really significant component of Artis’ total valuation. At this point of time, the remaining assets in relation to our gross book value is actually quite immaterial and the contributory cash flows from them,” he said.

“We’re looking to focus our efforts in a more strategic way. We think that we’ll be very dominant long-term and competitive landlords and we don’t feel that this is going to be the case now that we’ve reduced our position so much in the Calgary office market.”

Downtown vacancy about 30 per cent

IMAGE: Corey Colville, head of strategy, real estate, at Artis REIT. (Courtesy Artis)

Corey Colville, head of strategy, real estate, at Artis REIT. (Courtesy Artis)

Calgary’s office market has struggled for the past seven years since the collapse of oil prices in late 2014. That led to massive layoffs, particularly in the city core where many energy companies had their corporate head offices. Obviously, fewer people has meant less need for office space throughout the city.

The downtown Calgary office vacancy rate has hovered around the 30 per cent mark for some time.

“You know, we’re not quite as pessimistic as some of the news headlines would indicate. Naturally, and quite obviously, there’s been a struggle in the market, but we are confident that Calgary is one of the most important cities in Canada and that Canada is a phenomenal country to invest in,” said Colville.

“In time, we believe that Calgary will make a strong resurgence and comeback and we believe that Calgary will benefit from the wave of immigration to come and the rejuvenation to the energy markets over time.”

The Artis REIT property portfolio

In Q2 2016, Artis had 260 properties of about 26.6 million square feet overall; 191 properties in Canada with about 17.1 million square feet and 69 properties in the U.S.A. with about 9.5 million square feet.

At that time, it owned 73 properties in Alberta with about 6.7 million square feet. By the end of Q2 2021, that number had decreased to 40 properties with about 2.7 million square feet.

At the end of Q2 2021, Artis had 133 Canadian properties with about 10.4 million square feet and 70 U.S. properties with about 11.6 million square feet for an overall total of 203 properties and 22 million square feet.

The REIT’s portfolio at the end of the second quarter was 42.7 per cent office, 38.2 per cent industrial and 19.1 per cent retail.

Its overall occupancy was 92.3 per cent in Canada; 97.7 per cent for industrial, 83.3 per cent in office and 90.8 per cent in retail. In the U.S., its overall occupancy was 91.8 per cent comprising 94.3 per cent for industrial and 87.4 per cent for office.

Colville said the third quarter will feature a further and material shift of the portfolio following the sale of 27 of 28 of its Greater Toronto Area industrial properties. The 28th property is also for sale.

Other recent portfolio activity

– Acquired a parcel of industrial development land in Minnesota’s Twin Cities Area, for US$1.5 million.

– Disposed of an office property in Calgary, three retail properties in Regina  and a portion of a retail property in Fort McMurray, Alta., for an aggregate price of $62 million.

– On June 30, Artis entered into an agreement to sell the GTA Industrial Portfolio, comprising 28 industrial properties located in the Greater Toronto Area. On July 15, the REIT closed on 26 of the 28 properties for $696.7 million. One of the remaining properties is expected to close in Q3 2021 and generate gross proceeds of $26.7 million. The remaining property will be actively marketed for sale.

– Subsequent to June 30, it also disposed of the King Edward industrial portfolio, comprised of two properties in Winnipeg, for $3.2 million.

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