Fall Forecast 2015.pdf

Edmonton Fall Forecast 2015
NAI INSIGHTS
Edmonton continues to demonstrate high
economic strength despite the energy sector
downturn. Non-residential building permits have
continued to rise and Alberta’s construction sector
currently maintains healthy employment levels.

“Until a consensus on market
direction is clear, the holding pattern
may continue into Q3 and Q4”
Overview
Edmonton continues to demonstrate high economic
strength despite the energy sector downturn. Nonresidential
building permits have continued to rise
and Alberta’s construction sector currently maintains
healthy employment levels. While some may forecast
a recession in Alberta, Edmonton’s economy remains
buoyant and projects confidence for continued growth.
Non-Residential Building Permits Continue to Rise
The government issued a total of $957 million nonresidential
building permits throughout 2014 and there
has been an increase of $12 million in non residential
building construction investments for the first quarter
of 2015 compared to the same period in 2014.
Sales and Leasing Activity
Vancouver
Edmonton
2014 Total Value of Non-Residential Permits
Calgary
Toronto
Canada
0.67
0.95
1.03
2.37
11.9
0 5 10 15
Billions
Total Value of Non Residential Construction Investments
for 2014 Q1 VS 2015 Q1
Many businesses, since the beginning of the year, are
in a holding pattern waiting to make decisions. Until
a consensus on market direction is clear, the holding
pattern may continue into Q3 & Q4.
Edmonton
Calgary
0.66
0.78
0.96
1.07
2014 Q1
2015 Q1
While leasing and sales transactions continue, the
pace of activity has slowed. Most business owners
are looking to the recent drop and fluctuation in oil
prices since November 2014, the change in provincial
government and the upcoming federal election. It
is unclear how these changes will effect the local
economy in the near and long terms.
0.81
Vancouver
0.86
2.40
Toronto
2.54
12.85
Canada
12.85
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00
Billions
Ultimately a lack of confidence by many will effect the
market with the slowing of activity we are seeing. While
many commentaries are weary of negative outlooks, it
is only prudent that business owners remain cautious
when the market is without a consensus; that is “good
business”, a lesson which many learned from 2009.
Unless a strengthening in oil prices returns to $60+
per barrel, with some confidence the price can be
maintained, we project the current reduced activity
level to persist for the balance of 2015.

“...New supply will put pressure on
existing properties as availabilities
seek tenants or buyers.”
With the continued supply of new industrial and office
projects previously committed to or underway, this
new supply will put pressure on existing properties as
availabilities seek tenants or buyers. However this is
not to say properties in all classes are not in demand,
this slowing of activity is coming off from a heated
2014. The new supply and reduced activity will slow
values from increasing at the rate seen in the last five
years.
Rent vs. Own
Business Condominiums have become a much larger
market segment in Edmonton. With the continued
low interest rates, it has become more possible for
businesses to own their space rather than rent. Many
developers have embraced this concept converting
multi-tenant rental properties to business condos.
Given the sales activity and increases in land value,
we expect this trend to continue.
New construction delivery dates (in millions sq. ft.)
Multi-Family
Total $ Value:
No. of Transactions:
Industrial Buildings
Total $ Value:
No. of Transactions:
Commercial Buildings
Total $ Value:
No. of Transactions:
Mid-Year
2015
$271,336,162.
33
$148,979,388.
46
$124,206,000.
29
-
Mid-Year
2014
$187,044,800.
33
$172,949,939.
56
$198,106,421.
46
Mid-Year
2013
$188,758,233.
32
$252,833,537.
61
$162,120,032.
34
“Activity was down sharply with
regard to industrial and commercial
building sales. Industrial activity was
down 14% as compared to 2014
with the decline being even sharper
as compared to mid year 2013.
Commercial building sales were
down 37% as contrasted to mid-
2014.” (The Network)
Industrial Condos
Total $ Value:
No. of Transactions:
$23,961,986.
12
-
$19,657,740.
42
$26,345,759.
41
Commercial Condos
Total $ Value:
No. of Transactions:
$32,603,117.
44
$21,190,585.
27
$20,459,386.
29

Industrial
The vacancy rate for Edmonton’s industrial market remains low. Continued interest from industrial tenants
was strong throughout the first quarter and then slowed quickly coming into the summer months. The
majority of tenant interest continuing into Q2 & Q3 are businesses that are not dependent on the oil/gas
industry. This activity reflects on the local consumer market and the continued growth of the city. Most of
these industrial tenants are looking to upgrade, expand and/or relocate.
80
70
60
50
40
30
20
10
0
Number of Industrial Availabilities by Size Range
and Average Asking Range
39
39
71
65
North
South
North
South
26
30
32
38
North
South
North
South
Under 5,000 sq.ft 5,000-10,000 sq.ft 10,000-15,000 sq.ft 50,000 + sq.ft
64
48
35
29
North
South
North
South
2014 2015
22
8
72
35
N
S
North
South
Average Asking Range
Sq. Ft 2014 2015
Under 5,000 $10.55 $11.82
5,000-10,000 $10.89 $11.93
10,000-15,000 $9.73 $10.94
50,000+ $9.12 $9.40
• The average industrial asking rate
increased on average 9.15% from 2014
to 2015
• There has been a high increase in the
number of industrial availabilities under
5,000 and over 50,000+ sq. ft and
slight increase for spaces between
5,000-10,000 sq. ft.
• There has been a decrease in industrial
availabilies for spaces between 10,000-
15,000 sq. ft.
Suburban Office
With the new redevelopments and new office inventory in Edmonton’s downtown core, such as Edmonton
Arena “Ice District” and the City of Edmonton consolidating its office space, we expect to see lower
absorption in the suburban office market. Additionally there have been new office buildings and numerous
smaller office buildings built for owner users with additional capacity seeking tenants.
Number of Suburban Office Availabilities by Size Range
and Average Asking Range
250
200
150
100
50
0
62
North
79
South
211
North
167
South
86
North
117
South
235
North
233
South
36
N
2014 2015
20
S
102
North
Under 2,000 sq. ft. 2,000-10,000 sq. ft. 10,000 sq. ft. +
110
South
Average Asking Range
Sq. Ft 2014 2015
Under 2,000 $16.16 $17.91
2,000-10,000 $17.47 $18.55
10,000+ $21.13 $19.71
• The average asking rate increased on
average 9.2% for office space under
2,000-10,000 sq. ft. For 10,000 sq. ft.
and more, the average asking rate has
decreased by 9.3%.
• The suburban office inventory has
increased exponentially in 2015,
compared to 2014.

“The new supply and reduced activity
will slow values from increasing at
the rate seen in the last five years”
Retail
Edmonton’s diverse retail market continues to increase with new developments across the city mainly due to
the fast-growing residential expansion in Edmonton and surrounding communities. Retail availabilities have
increased mainly due to the addition of numerous neighbourhood centers added over the last year.
Retail rental rates have stayed relatively the same from 2014 to 2015 due to the increased supply.
180
160
140
120
100
80
60
40
20
0
Number of Retail Availabilities by Size Range
and Average Asking Range
28
North
117
82
45
39 40
South
North
South
North
South
153
132
Under 2,000 sq. ft. 2,000-10,000 sq. ft. 10,000 sq. ft. +
North
South
9
N
2014 2015
8
S
57
North
40
South
Average Asking Range
Sq. Ft 2014 2015
Under 2,000 $21.99 $21.75
2,000-10,000 $22.10 $22.55
10,000+ $21.82 $20.77
• Retail availabilities have increased in
2015 compared to 2014
• The average asking rate has been
relatively the same from 2014 to 2015
Non-residential Building Construction Investment,
By Census Metropolitan Area (quarterly)

“[Office] rental rates on the decline...
as landlords attempt to retain existing
tenants and attract new ones”
Downtown Office Forecast
With the skyline downtown having the most cranes our city has seen, it will bring new supply of office and
retail space. The downtown office market has the highest vacancy rate out of all property classes. Saying
that, there is more new office supply under construction or committed to developing in the downtown market
over the next two years than Edmonton has added to its supply in the last twelve years.
As both downtown and suburban office vacancy rates rise, we will continue to see rental rates on the decline
throughout 2015 as landlords attempt to retain existing tenants and attract new ones.
The confidence in our city and the glowing economic outlook brought with it the expected demand for this
new supply, now only time will tell if consensus and clarity will return in time to meet with those expectations.
Square Footage (in 000,000s)

References
References
(1) Edmonton Economic Development Corporation (2014)
(2) Statistics Canada 2014
(3) Altus Group Limited 2014
(4) The Network - 2015 Mid-Year Market Overview
The data and statistics derived on land and building sales is based on a review of a variety of sources which monitor
Alberta Land Titles and NAI Edmonton’s own research data. Leasing availabilities and average rates are produced with
NAI internal research data. All values are provided as an illustration of the market activity only and should not be fully
relied upon as the currency of the information and the total amount of data available could change at any time.
The information contained herein is believed to be correct but is not warranted to be so.
4601 99 Street NW
Edmonton, AB T6E 4Y1
+1 780 436 7410
naiedmonton.com

NAI Commercial Real Estate Ltd.
4601 99 Street NW
Edmonton, AB CANADA T6E 4Y1
+1 780 436 7410
naiedmonton.com