Gerald Tostowaryk

Commercial and Residential Real Estate

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It sure is difficult to write a blog when it’s a beautiful sunny Friday before Canada Day and I’ve already got visions of sitting outside at Café Bicyclette eating a yummy croissant and sipping on a hot coffee, but if I don’t get it done I will feel guilty while chewing on my croissant so I may as well just do it and consider the treat a reward for my diligence. So let me provide you with a few bits ‘n bites before I go grab a few of my own.

 

The sources for the below tidbits are (in no particular order) the Government of Alberta, IREM, ATB Financial, the Edmonton Journal.

 

ECONOMICS

 

Alberta Budget Deficit a whopping $10.3 Billion

It’s been an interesting few weeks of news, not the least of which is our recent Alberta Government budget announcement. OUCH! we had a $10.8 billion deficit in fiscal 2016 and our total debt is now $33 billion. To make matters worse, the future numbers don’t look any better with us being on track to hit a $10.3B deficit this year and similar numbers in the cards for the foreseeable future. Maybe I’ll forego the croissant and just have a coffee.

Wait! Apparently the recession is over and Alberta is predicted to lead the country in GDP growth this year. Croissant is back on the menu.

 

Alberta Experiencing Net Population Losses

During the recession Alberta experienced net out-migration. Throughout 2015 and 2016 our population dropped while much of the gains went to Ontario and British Columbia. Surprisingly Alberta still experiences net in-migration from Saskatchewan.

 

Deficit or Not, Alberta Still Big in the World of Beer

Recession or not, Alberta’s barley production is on a roll. Statistics Canada reports that Alberta farmers grew 4.4 million tonnes of barley last year, around 50% of the nation’s production. 55% went to livestock feed and 44% went to malting barley.

Alberta malt accounted for 53% ($241 million) of Canada’s malt exports. Hmmm beer and a croissant this afternoon maybe?

 

Alberta Wages Still Lead the Nation

Despite the recession, Alberta wages still lead the nation…by a good margin. In April, average weekly earnings for an Albertan were $1,125, 16% above the national average. Second place was – take a guess – Newfoundland. Whoda thunk?

 

Edmonton Employment Back on the Upswing

Employment has been on the rise in Edmonton since the beginning of the year. While employment growth did take a big dive starting in spring last year, bottoming out a -4% growth (yes minus 4) in December, it’s been back on the rise since January and rose by approximately 3,700 positions in May alone.


 

REAL ESTATE

 

 Retail Malls Investing in Technology to Compete with the Internet

The retail landscape has undergone lots of change in the last few years due to technology and the pesky internet. Many mall landlords are investing in technology to help protect themselves from the winds blowing in the retail marketplace. Changing consumer habits and e-commerce are taking their toll.

Stores are placing beacons that emit signals picked up by smartphones that offer shoppers personalized coupons or promotions.

Another large mall owner wrote off $10 million in an idea that didn’t go so well. They invested in a firm that designs pop-up stores with interactive features like display tables but the costs were higher than projected and the project failed. The idea is interesting though and maybe these folks were just a bit ahead of the curve? And what happens if someone breaks the internet?

 

Healthcare and Retail Joining Forces

Keeping on the retail theme, with the healthcare sector shifting away from inpatient care to outpatient care (you’re all better, get out), more and more providers are moving into locations closer to patients like, you guessed it, shopping malls. While outpatient clinics are growing, retail health clinics are also and Wal-Mart is piloting a venture in this field so the stakes are rising.

 

Alberta Real Estate Market Still a Strong Sector

While Vancouver and Toronto’s real estate markets may be high on the radar screen, Alberta’s market is also important. According to ATB, total investment in Ontario residential real estate during the first three months of this year came in at $12B, 10.5% higher than last year.

Now BC and Alberta can’t compete with that but together our investment was $9.1 B (BC $5.0B, Alberta $4.1B), no small potatoes. The good news story (for us) is that even with 2 years of recession, residential investment didn’t dip that much in Alberta and is growing again.

 

Amazon to Buy Whole Foods Market in the US

Amazon.com announced a couple weeks back that it intends to purchase Whole Foods Market in the US. This marks Amazon’s entry into the bricks and mortar world of retail, and in a big way. The deal is a whopping $13.7 B and should shake up the retail market. This should provide Wal-Mart with some strong competition, but I will still get my café and croissant at Café Bicyclette, speaking of which, see you later!

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