“I do commercial real estate brokerage in Fort McMurray and I have to tell you that I am off to the best start of a year in seven years,” said Ken Shebib, an associate broker at Colliers International.
“I hear the same 'doom and gloom' comments from guys at the coffee shop that is reported in the papers, but the companies are working and continuing to grow and do real estate deals. Hopefully, that continues.
“We have made it through other price drops before and will make it through this one. But for some reason the media is bent on reporting only the negative aspects. It isn't completely slow, and things are still going strong.”
A report published by Colliers International in January showed that there is mixed predictions for the commercial real estate market in Alberta. But, with house sales dipping in light of lower oil values, agents are increasingly looking to broaden their range of skills in the industry.
On the industrial side, it is calling for “cautious optimism” in the Edmonton market, with significant new supply slated to come into the market in 2015 and global demand for energy remaining strong.
However, in Calgary, the report said: “Continued strong demand for space may lessen with the slowdown in output growth within Calgary’s primary and utilities sector.”
The Colliers International report predicts the opposite for the office market. Edmonton is seeing continued positive growth, developer confidence is up and 1.5 million square feet of new office inventory is entering the market in the coming years.
But Calgary continues to see vacancies rise in the office market. “With nearly 5.5 million square feet currently under construction along with a softening demand for office space, the overall sentiment is one of caution moving into 2015,” said the report.
A report published by CBRE last week had similar findings. It found that, in Calgary, commercial investors continue to place capital with confidence, despite declining oil prices.
In Edmonton, meanwhile, it found that lower energy prices could hinder exploration activities going forward, but that the city’s largest challenge remains the wave of new downtown office construction.
Lance Frazier, a broker at DTZ in Edmonton, stressed that commercial real estate covers a wide variety of properties and that generalizations are dangerous.
“Each real estate sector has general characteristics that by definition are not appropriate for all properties in that category in all locations throughout the city,” he added. “An overbuilt downtown office market does not mean that there are not opportunities for other types of office purchases in the suburbs.
"Also, the downtown overbuilding [in Edmonton] has been in the Class “A” towers and there are still opportunities in smaller properties for investors and owner users.
“Edmonton, in general, is poised to go through some difficult times overall due to the turndown in oil prices. Some investors will see this as an opportunity to acquire properties not previously available, while others will pull back on their buying intensions to see how things shake out.”
With oil prices dropping and reports of “doom and gloom” for the Alberta real estate market, one expert advises agents to turn their investor clients toward the commercial market.