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Cannabis, tech and retail driving growth of commercial property markets in Western Canada

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Cannabis, tech and retail driving growth of commercial property markets in Western Canada

Canada NewsWire

Competition among cannabis companies fueling demand for commercial real estate

KELOWNA, BC, Oct. 10, 2018 /CNW/ - Both Kelowna and Edmonton are poised to become hot spots for Canada's cannabis market post-legalization with competing cannabis enterprises looking for operating space in both cities. While Kelowna's commercial real estate market saw an 8 per cent decrease in total sales value for commercial property types year over year, the city has identified more than 900 locations for retail spaces.  It's expected that the approval of licenses will be extremely competitive, further driving prices up for the remainder of 2018 and beyond.

Cannabis, tech and retail driving growth of commercial property markets in Western Canada (CNW Group/RE/MAX Western Canada)

Edmonton is also welcoming the addition of an 800,000 square foot facility by Aurora Cannabis which is contributing to the positive growth in the total sales value for the city's commercial properties, topping $1 billion. This was also the case in 2017 at the mid-year point. Although office and retail sales have not been as strong in the first half of the year, there are more than $500 million worth of completed transactions slated for the third quarter of 2018. Furthermore, the price of oil is continuing to stabilize with increasing global demand, helping Edmonton's commercial property market along the road to economic recovery.

"The upcoming legalization of cannabis is continuing to have a major impact on the commercial real estate market this year," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "In Kelowna and Edmonton, the cannabis industry is slowly absorbing the existing industrial spaces and development lands, which has contributed to the rise in lease rates for those areas."

Like Edmonton, Calgary's commercial real estate market primarily revolves around the city's oil and gas sector. Factors including the increase of oil prices, higher interest rates from the Bank of Canada and the Trans Mountain pipeline project have made buyers in the region more cautious, contributing to a significant year over year decline of 28 per cent in total property sales. However, Calgary is expected to remain stable as we head into 2019 due to a variety of reasons including the investment of big technology companies in the area.

While the past two years were exceptional in Greater Vancouver's commercial property market, the first half of 2018 has returned to historical norms. There were 523 commercial property sales in the first quarter of 2018, compared to 886 sales during the same period last year. However, continued growth in Vancouver's technology sector continues to drive demand for both office space and industrial space throughout the region. Larger tenants like Amazon and WeWork continue to expand and are expected to further increase inventory in the region going into next year.

"Investment by major companies like Amazon in Calgary and Greater Vancouver is evidence that commercial real estate – office space specifically – in Western Canada remains a hot commodity," says Ash. "As Canada continues to push further ahead in areas like technology, investors both domestic and abroad see the potential for growth here and are willing to call Canada home."

Regina's commercial real estate market has slowed this year due to economic uncertainty. High interest rates, the price of oil and the low Canadian dollar have all contributed to the commercial market. However, new projects are still underway such as the construction of the megamall at the Global Transportation Hub. The mall – which will boast 300 stores – was originally billed at $45 million but could go as high as $300 million when completed. Saskatoon on the other hand has experienced relative stability as 2017 was considered a year of recovery. This is mostly due to the relative diversity of its sectors which include manufacturing, agriculture, construction and the service industry.

In Winnipeg, the commercial market has experienced a 3 per cent decrease in total sales value year-over-year. While interest rates have remained low, the lack of available property has had the biggest effect on sales which has affected the decisions of investors.

2018 RE/MAX Commercial Investor Report

The 2018 RE/MAX Commercial Investor Report includes data from local boards and brokerages. Brokers and agents are surveyed on trends, local development and features.

About the RE/MAX Network

RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. Over 120,000 agents provide RE/MAX a global reach of more than 100 countries and territories. RE/MAX is Canada's leading real estate organization with more than 20,000 Sales Associates and over 900 independently-owned and operated offices nationwide. RE/MAX, LLC, one of the world's leading franchisors of real estate brokerage services, is a subsidiary of RE/MAX Holdings, Inc. (NYSE:RMAX). With a passion for the communities in which its agents live and work, RE/MAX is proud to have raised millions of dollars for Children's Miracle Network Hospitals® and other charities. For more information about RE/MAX, to search home listings or find an agent in your community, please visit www.remax.ca.

Forward-Looking Statements

This press release/report includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "intend," "expect," "estimate," "plan," "outlook," "project" and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding the future of commercial and residential real estate markets and statements regarding the Company's performance, outlook, and strategic and operational plans. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward looking statements. Such risks and uncertainties include, without limitation, (1) changes in business and economic activity in general, (2) changes in the real estate market, including changes due to interest rates and availability of financing, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain agents, (5) changes in laws and regulations that may affect the Company's business or the real estate market, (6) failure to maintain, protect and enhance the RE/MAX brand (7) fluctuations in foreign currency exchange rates, as well as those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in the most recent Form 10-K filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov.  Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.

SOURCE RE/MAX Western Canada

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