Bits n’ Bites is my regular column providing a few details on various happenings in the wonderful world of commercial real estate and the economy;
Information is sourced from the Realtors Association of Edmonton, the Institute of Real Estate Management, Alberta Treasury Branches, and the City of Edmonton.
Edmonton Inflations Stays Stable
The City of Edmonton reported that the CPI (Consumer Price Index) stayed stable at an annual rate of 1.1% growth in August, up very slightly from 1% in July. Rising natural gas and gasoline costs were offset by falling food and rental accommodation costs. Inflation is expected to remain within 1 – 1.5% in the coming months.
EI Payments continue to fall
June was the eighth month in a row in which EI payments in Alberta fell. There were 69,740 benefit cheques issued, 15% levels one year ago. It appears that most of the drop is due to folks finding work, but remember our governments (quite conveniently) don’t count you as unemployed anymore once your benefits run out.
They did bump back up again in July to 71,460 so the next few months will be interesting to watch.
Demand for Medical Office Buildings Could be Steady through 2055
The US Census Bureau projects that the number of Americans 65 and over will double to 92 million by 2055, comprising approximately 33% of the nation’s population. Needless to say, the medical office sector continues to perform well everywhere.
5 Tips to keep Renters for the Long Term
The Apartment Association of Greater Dallas lists five incentives they believe to be the top five in keeping renters in your building longer. Drum roll please…No. 1 – Reserved Parking, No. 2 – Paint and Cleanliness, keep it looking “new”, No. 3 – Give long term residents more upgrades and updates as a reward, No. 4 – Become a Part of Their Routine. Here they suggest things like the management office offering free premium coffee to residents in the morning.
No. 5 – Establish a sense of community through simple events and social gatherings.
Ever notice how the best ideas are so common sense?
Alberta Rents Coming Down, Especially in Calgary
No surprise here, with our recent economic downturn and resultant rising vacancy rates, rental costs are coming down. Interestingly, Calgary’s rents, when compared to 2002 levels, are much lower than Edmonton’s. Edmonton is at 140% of 2002 rents while Calgary is only at 125%. Remember though that actual rents are generally higher in Calgary, this is just compared to each city’s 2002 level.
Balanced Residential Real Estate Market in Edmonton in August
The Realtors Association of Edmonton reported a sales to listings ratio of 52% in August which is pretty much equally balanced between sellers and buyers. The average sale price YTD is $376,950 which is basically unchanged over the last 4 years, about 3% higher than in 2014.
Oil patch hiring, but paying less
Oil and gas sector average weekly wages fell to $2172 in June. Of course that’s still nearly double the provincial average for all workers ($1132) but it is down over 9% from the peak. The patch is hiring (over 17,000 new jobs last year) but is paying less.
Alberta Exports Continue to Slide
Most Alberta exports, not just petroleum products, have been on a slide since 2014 although they have recovered as of late. While we are still well below 2014 levels (around $10B annually then versus about $7.6B currently), exports have risen significantly since bottoming out in spring of 2016 at around $5.5B.
Amazon looking for new headquarters
Amazon is going out for bids from major North American cities for it’s “HQ2” second headquarters that could offer as many as 50,000 new jobs. Cities with over 1 million metropolitan area inhabitants, an international airport, good mass transit and a good hockey team (okay just kidding about the hockey team) can bid for the project. Edmonton?
Millennials Value Flexible Workspaces
Amazon will do well to pay attention to this study. A Work Environment Survey from Capital One found that 85% of professionals feel they work better in flexible work spaces with options like nursing rooms, artwork, natural light, and environmentally friendly programs. 80% said they don’t care about innovating unless their workspace is innovative also, and 70% don’t care about local culture.
Building Permits Continue to Slide
For the second month in a row, building permits have fallen throughout Alberta. In July, just over $1B in permits were issued, down 7% from June. Compared to last year we are down 9%.
The good news for Edmonton is that the majority of work took place here. Our activity level fell 1.4% in July compared to 13% for Calgary.
Residential permits were up in Edmonton in July by 4% and governmental/institutional activity was up over 4 times, but commercial activity continues to slide.
Alberta Language Characteristics from Census Canada
No surprise, 76% of Albertans have English as not only their sole mother tongue (first language learned). Only 1.8% list French as their sole mother tongue, compared with 21% nationally. 23% of Albertans list an immigrant mother tongue, higher than the Canadian average of 22.3%
Alberta Oil Production on the Rise Lately
Oil extraction in Alberta rose by almost 6 million barrels (7.6) from April to May. The last 12 month period was a whopping 40% higher than the previous one, of course the Ft. McMurray fires contributed significantly to that. Unfortunately the U.S. continues to pump out oil at near record highs, contributing to the lower prices.