September 2020 Calgary Market Report
We are pleased to provide you with some of the key insights to show you how the following issues and factors will impact the Commercial Real Estate market:
- Alberta is now facing a $24.2 billion fiscal budget deficit, representing 8.1% of GDP. The drastic declines in government revenues has led net debt to reach 20% of GDP but is expected to increase by 40% or $26.7 billion to $66.9 billion by March 31, 2021. Without a quick rebound in oil prices or signs of diversification, Albertans will likely be facing higher taxes in the long run.
- After the massive blow to employment in Alberta, which resulted in 360,000 jobs being wiped out at the peak of the pandemic, employment gains are starting to recover. However, with many still wondering where their next paycheque will come from, Alberta saw the highest percentage of mortgage deferrals in the country during the pandemic at 21%.
- Calgary’s downtown office vacancy rate remains at 20% but has not seen major increases since the start of the pandemic. Conversely, the suburban market has seen net absorption approach one million square feet over the past year, bringing down the suburban vacancy rate to 10% while maintaining Calgary’s overall office vacancy rate at 15.7%.
- The industrial sector in Calgary continues to face challenges with declining rents and market prices, but with new stock continuing to hit the market, the availability rate has now reached 9% across Calgary. Despite weakening performance indicators, Rocky View County continues to become a hub for distribution and logistics with industrial assets increasing in value by 9.5%.
- Retail sales in Alberta have fully rebounded after bottoming out at $4.9 billion in April. Latest figures in June saw a 19.2% month-over-month increase to $7 billion or a 4% increase compared to June 2019. Although leasing demand is expected to remain weak for the remainder of the year, the cannabis sector continues to announce new retail locations, helping to fill the void left by other struggling retail sectors.
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