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Alberta

A glance at commercial real estate

Had a little window to do a post today, so figured I’d take a quick look at the commercial real estate stats for Edmonton. I have had a passing interest in just seeing how they’ve shaped up over the years, and how they look now. So, without further ado, here is a look at historical sales and inventory tallies.

We’ll start with sales. I guess what I find interesting is that there is really no sign of the big economic boom what-so-ever. Sales actually appear to be lower from 2005-Oct ’08 then they were earlier in the decade. Though, of course, with the new commercial construction stats quite likely tell a different story, it’s just interesting it never showed up in the resale market.

We do see a drop off from mid ’07 through this spring that’s timing coincided with the drop off in housing sales… but considering the economy was still largely motoring through that period I would be very hesitant to equate the two.

It is interesting to note that 2008 was pacing to have the by far the lowest yearly sales total going back to at least 2001 even before the the financial crisis hit… then things got even worse on the sales front. So, that would suggest there was trouble brewing on that front before the economic bubble burst, but again like the residential market, sales took off again in the spring.

Some interesting movements to say the least.

Now we’ll look at inventory. This one again you’d be hard pressed to tell there was an oil boom roll through the city in the last five years. Inventory shifted down a bit from 2005 onward, but not to a big degree.

We’ve been hearing this year that commercial real estate could have a real inventory problem with all the construction and development we witnessed. This is suspected to be a big problem in a lot of North America in fact. Of course commercial real estate tends be leased much more so then residential, so the true scope of the problem may not surface in resale inventory, but I would assume it would still be relative.

So, the spiking of inventory that has taken root since last fall could be a sign of trouble, but it’s still early (this plot is only up to June FYI), and while much higher then they were a year earlier, they are not at all-time highs just yet.

This could be something to keep an eye on. Admittedly, I’m not terribly familiar with the ins-and-outs of commercial real estate (these are the numbers from the EREB). If any of you are a little more boned up on that market, it would be interesting to hear your take on it.