The Calgary Industrial Perspective - Colliers International

CMN CALGARY INC. I
COMMERCIAL REAL ESTATE
The Calgary Industrial Perspective
INDUSTRIAL I SECOND QUARTER 2010 I JULY 2010
Current Industrial Trends
The Calgary industrial real estate market saw its second consecutive quarter of decreasing
vacancy, dropping from 5.89% to 5.36%. The large decrease in vacancy over the past two
quarters is attributed mainly to a few large transactions that took place. The small and mid bay
markets, 0 to 10,000 and 10,000 to 30,000 square feet respectively, are still relatively stagnant
with a large number of options available in each submarket.
MARKET INDICATORS
Q2 2010
Va c a n c y 5.36%
Availability 8.60%
Ab s o r p t i o n 677,141
CALGARY INDUSTRIAL TEAM
Matt Binfet - VP/Partner
403-215-7253
matt.binfet@collierscalgary.com
Jon Mook - VP/Partner
403-571-8756
jon.mook@collierscalgary.com
Paul Marsden - Associate
403-571-8764
paul.marsden@collierscalgary.com
Michael Massing - Associate
403-298-0404
michael.massing@collierscalgary.com
Brad Pilling - Associate
403-571-8767
brad.pilling@collierscalgary.com
Evan Truman - Associate
403-215-7252
evan.truman@collierscalgary.com
Jessica Couillard - Associate
403-215-9867
jessica.couillard@collierscalgary.com
Casey Stuart - Associate
403-298-0421
casey.stuart@collierscalgary.com
Change From
Q1 2010
With increased activity in the large bay sector, the market has seen an impressive amount of
growth thus far in 2010. There has been nearly 1.5M square feet of positive absorption year to
date, which has already surpassed the total absorption level from 2009. We appear to be on
pace for 3M square feet of absorption by the end of the 2010 year, not too far off levels seen
in 2007 and 2008.
The simple economic effect of supply and demand is what the Calgary industrial market is
currently experiencing. Rental rates, for instance, are softest in the mid bay market as there
are many options for users to choose from in this size range. Conversely, landlords are
showing signs of holding firm to asking rental rates in the large bay market as fewer and fewer
options are available for tenants. The challenge in the large bay market is that there are both
newly constructed options and existing options (approximately 10 to 15 year old buildings),
both with similar functionality, but a large spread in asking net rental rates. The small bay
market has been more consistent in terms of the number of deals transacting, however, most
transactions are at rental rates that are 20-25% off from the market ‘peak’.
Many merchant developers and institutional landlords still believe that it is premature to
commence construction on new developments. This sentiment will have an impact on vacancy
and net rental rates for the remainder of 2010 and into 2011. If a developer commenced
construction on a new building today, the earliest it would be available for occupancy is the
first quarter of 2011. There is only 18,720 square feet of construction currently underway
that is available for occupancy. Look for at least one more quarter of decreasing vacancy,
positive absorption, and a moderate increase in net rental rates before speculative development
commences again.
Tenants who are approaching their lease expiry date currently have a window of opportunity
to negotiate a strong rental rate on a renewal. In many cases, tenants have obtained a decrease
in rental rates on renewals as market conditions have softened. This environment will be short
lived. The projected increase in absorption (market growth), combined with the decreasing
availability of lease options (vacancy), and a lack of new short term supply will create what is
referred to as the ‘lag factor’. This is when new supply is not available to meet the demand of
tenants, putting upward pressure on rental rate expectations from landlords. Although the lag
factor will be seen in some submarkets greater than others, it will begin to surface in Q4 2010
and early 2011.
Deborah Saunders - Research
403-444-3589
deborah.saunders@collierscalgary.com
www.colliers.com/calgary
Our Knowledge is your Property ®

CALGARY PERSPECTIVE I SECOND QUARTER 2010 I INDUSTRIAL
Vacancy and Availability
District Total Inventory (Sq. Ft.) Total Available (Sq. Ft.) % Available % Vacant
Alyth-Inglewood 2,897,296 3,163 0.11% 0.11%
Beltline 326,756 56,377 17.25% 14.29%
Bonnybrook 2,872,915 72,102 2.51% 2.51%
Burns 1,834,271 121,345 6.62% 3.92%
East Fairview 3,100,726 112,310 3.62% 2.86%
Fairview 1,691,092 71,987 4.26% 0.36%
Haysboro 378,894 2,506 0.66% 0.66%
Highfield 5,831,878 180,409 3.09% 2.60%
North Manchester 3,622,965 221,161 6.10% 6.10%
Riverview 980,225 17,024 1.74% 1.74%
South Manchester 5,043,448 102,834 2.04% 1.67%
Total Central Market 28,580,466 961,218 3.36% 2.68%
Airways 2,232,680 86,696 3.88% 3.60%
Beaverdam 661,709 21,479 3.25% 3.25%
Deerfoot Bus. Park 3,513,465 399,120 11.36% 9.66%
Freeport 1,168,667 80,999 6.93% 6.93%
Greenview 2,470,604 56,763 2.30% 1.86%
Horizon 4,188,210 226,373 5.41% 2.04%
VACANCY
Region
April 2010 July 2010 April 2010 July 2010
(Sq. Ft.) (Sq. Ft.) (%) (%)
Central 780,371 764,997 2.73 2.68
Northeast 2,037.174 2,028,610 5.77 5.75
Southeast 3,441,788 2,886,163 6.85 5.69
Total 6,893,934 6,339,225 5.89 5.36
AVAILABILITY
Region
April 2010 July 2010 April 2010 July 2010
(Sq. Ft.) (Sq. Ft.) (%) (%)
Central 939,542 961,218 3.28 3.36
Northeast 2,802,537 3,311,840 7.83 9.14
Southeast 5,849,497 5,454,171 11.39 10.48
Total 10,253,119 10,408,531 8.60 8.60
Mayland 1,739,798 53,832 3.09% 3.09%
McCall 3,649,921 318,045 8.71% 8.71%
Meridian-Franklin 5,283,755 376,955 7.13% 5.93%
Pegasus 678,261 49,828 7.35% 1.68%
Saddleridge 27,119 9,275 34.20% -
Skyline 1,846,819 65,781 3.56% 3.56%
South Airways 3,923,479 170,531 4.35% 3.50%
Stoney 1,981,192 1,193,880 60.26% 28.67%
Sunridge 1,320,776 112,152 8.49% 8.49%
Westwinds 1,541,401 90,131 5.85% 3.18%
Total NE Market 36,227,856 3,311,840 9.14% 5.75%
Douglasdale 1,321,767 104,026 7.87% 3.17%
Dufferin 2,950,743 505,737 17.14% 3.99%
Eastfield 2,415,844 181,117 7.50% 4.67%
Eastlake 3,654,800 478,173 13.08% 11.06%
Foothills 22,327,068 1,897,623 8.50% 5.83%
Forest Lawn 1,392,750 2,400 0.17% 0.17%
Golden Triangle 756,635 18,164 2.40% 2.40%
Great Plains 4,701,413 1,090,616 23.20% 14.97%
Mountainview 288,916 - - -
Ogden 345,730 - - -
Rangewinds 776,672 34,711 4.47% 4.47%
Availability Vacancy Total Occupied Space
Fully Serviced Land Values
Section 23 2,683,740 60,540 2.26% -
Shepard 656,056 - - -
Shepard Business Park 1,069,635 139,313 13.02% 8.48%
South Foothills 2,518,493 51,876 2.06% 1.81%
Southbend 1,195,840 68,518 5.73% 5.73%
Starfield 2,017,118 788,063 39.07% 1.36%
Valleyfield 955,592 33,294 3.48% 3.48%
Total SE Market 52,028,812 5,454,171 10.48% 5.69%
Airdrie 1,272,609 418,090 32.85% 32.85%
Balzac 775,500 127,500 16.44% 33.95%
Cochrane 45,865 - - -
MD of Foothills 6,000 - - -
MD of Rockyview 1,913,686 119,339 6.24% 5.58%
North West 159,415 16,373 10.27% 5.93%
Total Other Districts 4,173,075 681,302 18.66% 17.86%
Overall Market 121,010,209 10,408,531 8.60% 5.36%
2 COLLIERS INTERNATIONAL

CALGARY PERSPECTIVE I SECOND QUARTER 2010 I INDUSTRIAL
Current Freestanding / Land / Condo Trends
The freestanding owner/user sales market continued to be strong through the second quarter of 2010. Driven by low
interest rates, more favorable financing and a general opinion that sale values have hit bottom and are beginning to
rebound has resulted in strong activity. The number of quality freestanding buildings currently on the market is very
limited which should result in more land sales. Users will determine that purchasing an existing suitable property is not an
option and focus on new build to suits, which we are beginning to see now on requirements under 15,000 square feet that
has resulted in more land sales within Calgary after a slow 2009. The City of Calgary owns and is offering the majority
of the fully serviced industrial land available in the southeast for sale. The City remained relatively firm on asking prices
despite the large inventory available when compared to private owners and developers who have reacted to the changing
land market in 2009 and 2010 with lower prices.
All eight of the lots in Phase I of the City’s Great Plains Industrial Park remain available at asking prices from $550,000 -
$675,000 per acre with only two lots available that are less than 2 acres in size. All remaining lots available from the City
in Eastlake Industrial Park are over 2 acres although there are smaller lots available from private owners. Average selling
prices in the southeast remained at approximately $510,000 - $540,000 per acre. Remaining lots in Eastlake have asking
prices from $560,000 - $625,000 per acre.
Asking prices for partially serviced industrial land along the 84th Street Corridor remain stable in the second quarter with
prices from $265,000 - $350,000 per acre and sales transacting in the same range.
Springbank Commercial Park on the west side of Calgary which rarely sees transactions due to the small inventory of
land saw three separate land sales. A total of seven acres sold in Springbank at approximately $350,000 per acre. These
sales all occured in the second quarter.
The northeast and central industrial land prices remained relatively unchanged at approximately $800,000 - $1,000,000
per acre given the lack of immediate inventory available.
The industrial condo market saw a resurgence in the second quarter of 2010. Virtually all of the existing condo bays in
Eastlake Industrial Park that were constructed in 2008/2009 and remained on the market during the downturn in 2009
have now sold. This is a positive sign of a more active industrial sales market as small bay condo sales are typically the
first to slow in a downturn and the last to come back in an improving market. Selling prices for “shell” condo bays are
$150 - $185 per square foot for units of approximately 3,000 square feet. This is off of peak pricing of $185 - $200 per
square foot seen in 2008.
Notable transactions
LEASED - 220,000 square feet
Landlord: The Beedie Group
Tenant: TransCanada Turbines
SOLD - 4.04 acres
Vendor: Jayben Holdings Ltd.
Purchaser: ASC Springbank Inc. - Lot 4
Purchaser: Outer Edges Landscaping Inc. - Lot 5
COLLIERS INTERNATIONAL 3

CALGARY PERSPECTIVE I SECOND QUARTER 2010 I INDUSTRIAL
Featured Listings
Fo r Sa l e
/Le a s e
Fo r Sa l e
6835 - 8th Street NE
38,577 square feet on 3.03 acres
Contact: Jon Mook, & Casey Stuart
Highland Industrial Park
Design Build Opportunities
Contact: Matt Binfet, Paul Marsden
& Jessica Couillard
Notable Transactions Co n t i n u e d...
LEASED - 16,309 square feet
Landlord: Norgar Management Limited
Tenant: Wildwood Cabinets
Fo r Sa l e
70 Commercial Court
13,106 square feet on 7.6 acres
Contact: Michael Massing & EvanTruman
Fo r Sa l e
Freeport Industrial Park
4 parcels (2.29 - 2.92 acres)
Contact: Brad Pilling
SOLD - 11,450 square feet on 3.05 acres
Vendor: RPM Trailer
Purchaser: The Motor Company Inc.
Colliers Calgary Industrial Division
would like to thank the following for
their business this 2nd Quarter of 2010:
19th Wife Productions Inc.
72nd Avenue Limited Partnership
1166444 Alberta Ltd.
1289048 Alberta Ltd.
AGAT Laboratories Ltd.
ASC Springbank Inc.
Albright Lighting Ltd.
Arctica Showcase Canada Inc.
Atlantis Realty Services Inc.
bcIMC Realty Corporation
C3 Integrated Solutions Ltd.
Calgary Industrial Properties Ltd.
Capital Paper Recycling Ltd.
Carshacks Inc.
Cathedral Energy Services Ltd.
Crossroads C & I Disbributors
Crown Granite & Marble
DIRTT Environmental Solutions Ltd.
Enerflex Systems Ltd.
Enersul Inc.
Fairfield Watson & Company Inc.
Farm Air Properties Inc.
Foothills Equities Inc. c/o Tonko Realty Advisors
Gamma Dynacare Medical Laboratories
Great West Resources Ltd.
H & H Northwest Ltd. Construction Management
Hampton Developments Ltd.
Highline Electrical Constructions Ltd.
Home Flooring Design Centre Corporation
Hopewell Airport (Cgy) Developments Inc.
Hyatt Auto Sales Ltd.
ING Real Estate Canada
Jayben Holdings Ltd.
Kohl & Frisch Limited
Lance Holdings Ltd.
Metro Hardwood Floors Ltd.
Nordic Investments Ltd.
Norberg Properties Ltd.
Outer Edges Landscaping Inc.
Prospect Canada Inc.
RCX Logistics Ltd.
Redcliffe Realty Advisors Inc.
Relwin Holdings Ltd.
Siemens Laserworks Inc.
Spectrum Supply Chain Solutions Inc.
SREIT (Quest Foothills) Ltd.
Strategic Group
Trueman Distribution Ltd.
Supreme Windows
United Agri Products Canada Inc.
Voit Real Estate Services
Weston Bakery Limited
WestRim Contractors Ltd..
CMN Calgary Inc.
200, 10500 - 48th Street SE • Calgary, AB • T2C 2B8 • T (403) 266-5544 F (403) 705-0477
Our Knowledge is your Property ®
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