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Unlocking Alberta’s Commercial Real Estate Potential in 2024

As we enter the second half of 2024, Alberta’s commercial real estate market is on the brink of a significant transformation, brimming with growth potential. With its robust economic foundation, strategic location, and burgeoning industries, Alberta presents many opportunities for investors, developers, and businesses. This article delves into the current landscape, highlights critical initiatives by Triovest, and explores the vibrant developments in Edmonton, aiming to provide a comprehensive overview of Alberta’s commercial real estate potential.

Alberta’s Economic Resurgence
Alberta’s economy is experiencing a resurgence, driven by a diversified portfolio of industries, including energy, technology, and agriculture. This diversification has led to a robust GDP growth projection of around 3% as of June 2024, underpinned by strong economic health and an unemployment rate below the national average​​. The government’s pro-business policies and incentives attract domestic and international investors, further bolstering the market.

Terrific Demographic Growth
One of the most compelling aspects of Alberta’s economic landscape is its impressive demographic growth. In 2024, Alberta’s population is expected to grow by 1.8%, bringing the total population to approximately 4.7 million. This growth is fueled by a net migration increase of 40,000 individuals, driven by domestic and international immigration. This influx of new residents brings diverse talents and skills, enhancing Alberta’s labour force and driving economic activity​.

Office Spaces: Transforming Urban Landscapes
Calgary and Edmonton’s office markets have adapted well to evolving work patterns, with premium office spaces in prime locations that maintain strong demand. In 2024, Calgary’s office vacancy rate has decreased to 10.5%, and Edmonton’s stands at circa 17%. Cap rates for prime office spaces in these cities range from 5% to 6%, indicating healthy market activity. Notably, Calgary has emerged as a leader in North America with its innovative subsidies for converting office spaces into multi-residential units, addressing office vacancies and meeting the growing demand for residential spaces.

Triovest’s Strategic Initiatives
Triovest, a leading commercial real estate advisory and management firm, has been at the forefront of capitalizing on Alberta’s potential. Their initiatives reshape the skyline and set new benchmarks in sustainable and innovative development.

For example, the ATCO Centre in Edmonton was certified with an Energy Star score of 100, ranking it the top-performing building in North America regarding energy use intensity​. This achievement is due to technical expertise, prudent capital planning, and on-site delivery. The building’s performance is enhanced by continual improvements and performance optimization, supported by thoughtful lifecycle capital and grants where available.

Industrial and Logistics: Driving Economic Momentum
Alberta’s industrial sector thrives on robust e-commerce growth and strategic positioning in North American trade routes. Calgary and Edmonton boast near-historic low vacancy rates between 4% and 5%, with competitive cap rates between 5% and 6%, underscoring strong investor confidence and the sector’s long-term growth potential​​.

Retail and Multifamily Residential: Stability and Opportunity
The retail sector has shown signs of stabilization in 2024, particularly in vital urban centres. Meanwhile, the multifamily residential market benefits from ongoing population growth, presenting cap rates of approximately 5.5% to 6.7%. This sector’s resilience and appeal offer stable-income properties that attract discerning investors​​.

Edmonton: A City of Opportunities
Edmonton, Alberta’s capital, is a commercial real estate development hotspot. The city’s strategic initiatives and vibrant culture make it an attractive destination for investors and businesses.

Economic Snapshot
The Edmonton region has demonstrated resilience and growth despite the challenges posed by the 2020 pandemic, supply chain disruptions, and inflationary pressures. The area is expected to outperform Alberta’s GDP growth in 2023 and 2024, fueled by increased international demand for energy resources and growing activity in the clean energy sectors​. Business confidence is rising, crucial for influencing investment decisions and positively impacting aggregate demand. The robust manufacturing sector has experienced a remarkable 50% increase in sales since January 2020, demonstrating a Compound Annual Growth Rate (CAGR) of 29% over the last two years​​.

Transit-Oriented Developments
Edmonton’s focus on expanding its public transit infrastructure opens up new opportunities for transit-oriented developments (TODs). These projects enhance connectivity and accessibility, making them attractive to businesses and residents.

Navigating Challenges and Opportunities
Investors in 2024 face rising property acquisition costs and a complex regulatory environment. However, strategic opportunities exist in secondary markets and sectors where demand exceeds supply, such as industrial logistics and multifamily residential. Investments in tech and sustainability projects also offer high return potential, highlighting the nuanced approach required to navigate Alberta’s commercial real estate landscape.

Alberta’s Investment Horizon
Alberta’s real estate market in 2024 offers a unique blend of stability, growth potential, and sector diversity, making it an attractive destination for institutional investors. With strong economic indicators, a strategic location within North America, and a commitment to innovative development, Alberta stands out as a leading investment opportunity within Canada’s real estate spectrum. For investors seeking dynamic opportunities in Canada’s commercial real estate market, Alberta provides a solid investment rationale supported by compelling economic and market dynamics, ensuring it remains at the forefront of investment considerations in 2024.

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