There are always two sides to a coin. The same can be said for commercial real estate in Canada -- the good news and the no so good news, according to a well-known real estate forecaster. On a positive note, the office sector across most parts of the country has been rallying -- with the exception of Alberta's two major cities -- which continue to have high corporate vacancy rates, but the economy is expected to stabilize.
The real estate market in Wild Rose Country has been pretty bleak. But there's some good news on the horizon for the commercial real estate sector in Alberta, especially for the capital region. A recently compiled report from a commercial real estate company lists positive numbers when it comes to office vacancy rates in Edmonton.
It was a hectic year for business in Wild Rose Country. Commercial real estate has been part of the strange landscape of what transpired business-wise in Alberta in 2018 -- everything from retail space rentals to open up further contributed to the commercial real estate sector in the province. Since four years ago, when oil prices took a dive, vacancy rates have risen and rents have fallen in both Calgary and Edmonton.
The legalization of marijuana could mean a boom for real estate. Akin to the gold rush of days of yore, this green rush could really have an impact on commercial real estate transactions in Canada. Investors have been scrambling to get their feet in on the ground level and to sell cannabis legally, particularly in Alberta where the province has decided to allow marijuana to be sold in private retail outlets -- not to mention the space it takes to grow -- so commercial space is becoming a hot commodity.
The assessed valued of Calgary's downtown office buildings took a recent pummelling. Building values in Alberta's largest city dropped by about $4 billion in the last year. That change in commercial real estate values translates into increased taxes for non-residential owners of property outside the downtown core. City council will likely need to come up with a plan for tax relief in the short term while figuring out a long-term fix.
Automotive Properties Real Estate Investment Trust (APREIT) just sealed the deal on a multi-million dollar acquisition of two dealership properties. The commercial real estate deals included one in Sherwood Park, Alberta, and one in Laval, Quebec. The two auto dealerships set APREIT back about $55.5 million.
Prospective cannabis retailers may have jumped the gun a bit early. Those in Canada who are hoping to be accepted to sell legal marijuana but who won't be given the green light may be stuck with commercial real estate contracts that they may have a tough time getting out of. These individuals may have already signed leases that are pretty much ironclad, according to a Calgary-based real estate advisory company.
Officials in Calgary have already approved two shops in two different malls that will be selling legal cannabis -- that is two out of 83 applications for these areas alone. Alberta's commercial real estate sector stands to profit from the October legalization of recreational marijuana with retail stores all set to open shop in a variety of commercial locations, from malls to store front locations. Alberta's total cannabis store applications are approaching the 700 mark.
With the legalization of marijuana across Canada just around the corner, entrepreneurs and business owners are moving quickly to secure their spot in the market. From dispensaries to accessory shops, cannabis culture is positioned to create waves across the Canadian retail and commercial real estate landscapes.
Looks like the legalization of marijuana may heat up Wild Rose Country's business sector. Alberta has received 87 applications so far from people wanting to open pot stores, which will be smoking hot for the commercial real estate sector. The Alberta Gaming and Liquor Commission (AGLC) is expecting more.