“Sign, sign, everywhere a sign!” Of course the Jurassic Canadian rock group, Five Man Electrical Band, wasn’t singing about 2016 Calgary real estate, but the shoe fits.
Subtle or encouraging, there are signs in the Calgary real estate sector that the mood swing to cautious optimism has begun.
Despite the jarring broadside and the slow recovery of world oil prices and its impact on most-things-Calgary – from the job market, house prices and downtown vacancy rates to the economy and the social aftershocks felt by Calgary consumers – residential real estate and major project development reveal some interesting signs about the 2016 and 2017 Calgary mood.
“Calgary is ranked one of the most livable cities in North America,” says Grant Murray, senior vice-president of Concord Pacific, developers of The Concord, Calgary’s dazzling, new condominium complex on the south bank of the Bow River near the Peace Bridge. “And that’s a very positive and important business factor. After all, you can’t be ranked one of the most livable cities without opportunities and growth, particularly in real estate.”
Sam Corea, owner and broker of Sam Corea Re/Max Real Estate and one of Calgary’s most successful real estate professionals, also senses the return of confidence in the Calgary market. “No doubt about it. Real estate will forever be a supply-demand-driven business. Of course we may not be totally out of the woods but the trends are slowly showing confidence coming back to the Calgary market. Smart buyers are definitely buying and this is a good time to upgrade.”
The mid-summer, real estate resale good news/bad news from CREB (Calgary Real Estate Board) underscores Corea’s current buyer’s-market interpretation. The Calgary market – with various factors that put downward pressure on resale prices – continues creating ‘bargains.’
According to CREB stats, for the first six months of the year, single-family homebuyers saw more than $15,000 in savings through Calgary’s resale market, compared to the same time in 2015. The median price for a single-family home in Calgary was just over $501,000, down about three per cent from the year before.
The CREB numbers also detail that, due largely to the uncertainty of the Calgary mood, inevitable differences exist between buyer and seller expectations. A majority of single-family resales were in the $400,000 to 449,900 range and showed a slight year-over-year price drop, while prices in the $350,000 to $399,999 range had a small year-over-year increase.
Calgary real estate experts have various theories and explanations about signs of cautious optimism in the resale market. CREB points out that numbers from some specific Calgary areas are encouraging. Sales actually went up in the west, north and northwest areas, like Signal Hill, West Springs, Aspen Woods, Edgemont, Tuscany and Evanston, compared to the same period, last year.
The good signs are not only in suburban Calgary real estate. The city centre also showed mid-summer spikes in areas like Mount Pleasant and Hillhurst, where resales were also up from the same time last year.
“People are feeling more confident to buy – especially based on this time last year – just judging by my sales,” says Corea. “To be blunt about it, in the first six months of 2015, my business was down 83 per cent. Today, it’s up 20 per cent. And another exciting and encouraging aspect is that Calgary is becoming so diversified. When oil is down, doctors, lawyers [and] surgeons consider it a time to buy.”
While some painful speed bumps still hover over the primarily downtown commercial real estate market, Calgary’s increasing business diversity and other factors are leading to cautious commercial real estate optimism.
“The general mood from both a commercial tenant and landlord perspective is resignation to a new reality of low oil prices and cautious optimism that we have hit the low point and the economic environment will now improve,” notes Joe Binfet, managing director and broker at Colliers International Calgary and the leader of commercial real estate teams in Calgary’s downtown, suburban, retail, industrial and investment divisions.
“Downtown landlords are providing incentives like free rent, free furniture and large tenant improvement allowances in an effort to attract and retain tenants. The drop in rental rates has led to some tenants exploring options in the downtown core to improve their existing space by moving to A- and AA-class buildings. The trailing vacancy from this migration puts upward pressure on vacancy in the B- and C-class buildings.”
Key aspects of Binfet’s respected Calgary expertise are not only commercial real estate savvy but his grasp of Calgary’s oil and gas-driven but diversifying overall business community. “A return to over $55 per barrel would be a good indicator of a Calgary recovery. At this price, most Canadian crude oil producers will become sufficiently profitable and will scale up production.
“Retail stores such as Nordstrom Rack and popular Canadian retailer Simons (projected to open in the CORE in early 2017) are coming to the market and tech companies like Benevity are locating to the beltline and recruiting high-end engineers from oil companies. These are all signs that they see potential in the Calgary market,” Binfet says. “And oil and gas companies with strong balance sheets are acquiring key assets at low cost which signals they think the market may be at the bottom and on the way up.”
As Murray points out, The Concord is not only a dynamic and high-profile example of exciting confidence in Calgary’s downtown condo market, but a unique and unmistakable sign of Calgary positivity.
“Calgary is a lot more diversified than people think. A lot of the people who are looking at The Concord and buying have nothing to do with oil and gas,” he says. “In our price bracket, there’s not much competition. We’re $800,000 and up and going after a certain demographic. The Concord will be a uniquely lifestyle-focused community, targeted for various age groups and particularly baby boomers whose kids have grown up, with grand kids, maybe a second home in the mountains or Vegas and looking forward to giving up their big home but still have their luxuries, privacy, space and storage and enjoy turnkey living in the downtown environment.”
The two 14- and 17-storey towers on the Bow River will be complete with high-end amenities including private garages – some holding up to eight cars – an outdoor water garden that becomes a winter skating rink, and private elevators in 50 per cent of the suites. Concord Pacific has already sold more than 60 per cent of the first tower’s units, including five estate penthouses ranging from $3.5 to $7 million and a $3-million two-floor villa. The most expensive penthouse is $13 million.
“We recognize that Calgary may be feeling the effects of oil prices in the short term and this may be creating a cautious business environment,” adds Peter Webb, Concord Pacific’s senior vice-president of development. “Concord believes in the entrepreneurial spirit of Calgarians and we see great potential for Calgary as a model of great urban development.”
The Concord is another sign that Calgary confidence is on the rise.