The half-billion-dollar 2019 sale of Stantec Tower drove Edmonton’s commercial real estate market to end 2019 on a high note, with a record $1.7 billion in sales in the fourth quarter.
The $1.7-billion bump represented 53 per cent of total sales for the year, show the latest numbers from Altus Group. In total, there were 489 sale transactions, representing $3.3 billion, which is a 13 per cent decrease from 2018.
Ben Tatterton, a manager at Altus Group, describes 2019 as sporadic.
“It has been a typical pattern through the past several years in the Alberta market, let alone Edmonton where we have had lower levels of investment because of the provincial downturn,” he said. “I don’t think there is any particular reason that I could ascertain why it happened in Q4. Comparing it to previous years when we’ve seen this pattern, it can be at any point in the year.”
Overall sales dropped 13 per cent, which Tatterton said isn’t a surprise because of the current economic downturn.
Stantec Tower purchased for $517 million
Industrial made up the lion’s share of sales at 27.5 per cent with the largest coming from German-based company Deka Immobilien’s $517.5-million purchase of the recently completed 69-storey Stantec Tower from Oxford Properties.
“It is sort of the new kid on the block and it is a desirable property,” said Tatterton. “The price is kind of in that range for that type of property.”
A purchase of that size won’t be seen again for a while as the office sector market remains largely stagnant, he believes.
Summit Industrial snaps up 37 Alberta properties
Ontario’s Summit Industrial Income ended the year with 37 property purchases across Alberta, 22 of them in the Edmonton area. The total value is priced at $588 million. Industrial is one of the few sectors in the province to see an overall increase from 2018, at five per cent.
Tatterton noted 14 of Summit’s properties were in Calgary.
“That was a big deal for industrial, although the industrial numbers were strong with exception to that,” he said. “There is always buying opportunity in a market when there’s a downturn. That was probably more of a case of the seller exiting the market and the buyer wanting to move in and acquire their assets.”
Tatterton also believes Summit moving on those properties shows confidence in Alberta’s commercial market.
Retail, apartment sectors drop
Edmonton’s retail sector had a total of 76 transactions, representing a value of $664 million and a decrease of seven per cent from 2018. The largest contributor to the total was also in Q4, with LaSalle purchasing 50 per cent of the City Centre Mall for roughly $310.2 million.
The apartment sector had 56 transactions, worth $407 million, a 51 per cent decrease from 2018, although Altus notes 2019 was more in line with previous years.
Ian O’Donnell, executive director of the Downtown Business Association, said seeing LaSalle, Deka and other new companies coming to the area is a breath of fresh air.
“It is certainly a vote of confidence for our Downtown,” he said. “While it was disappointing Oxford Properties leave, as they started here, it is certainly exciting to have new players in the market. You don’t buy those kinds of properties just to sit on them. You go in and you have a plan.”
