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ROBUST RETAIL

Calgary demand for new retail space ‘unprecedented’: Colliers
More than 10 million square feet proposed
By Mario Toneguzzi,
Calgary Herald October 31, 2011

CALGARY — Demand for new retail space in Calgary has reached an ‘unprecedented’ level, says a report by Colliers International.

The commercial real estate firm says 27 projects comprising just over 10.7 million square feet throughout the city are in the planning, permitting or construction stage.

“The momentum of the Calgary retail market in 2011 can be best described as resilient and very robust,” says the report. “The overall vacancy rate has remained unchanged over the past 12 months at 1.45 per cent.

“Calgary has the distinction of having one of the lowest, if not the lowest, retail vacancy rates in all of North America.”

With the influx of both Canadian and international retailers, all vying for a “slice” of the Calgary market, the retail market is expected to remain very strong into 2012, with vacancy rates approaching 1.3 per cent, says Colliers.

“The retail development community is actively pursuing new projects throughout the city, including a push into inner-city mixed-use developments,” says the report.

A FRENZIED PACE!

Calgary office leasing activity a sign of prosperity
Employment growth expected to follow
By Mario Toneguzzi
Calgary Herald October 27, 2011

CALGARY — It is a symbol of both current and future prosperity.

And judging by the record, frenzied pace of leasing activity in the downtown office market, Calgary’s economic fortunes appear to be looking good right now - and down the road.

The leasing activity is sure to lead to future employment growth.

“Companies don’t snap up office space just to lounge in it — if energy companies are expanding their office footprint, they plan on growing their business. This means more drilling, more investment, more jobs and more economic growth for Alberta moving forward,” said Dan Sumner, economist with ATB Financial in Calgary.

Greg Kwong, executive vice-president and regional managing director of CB Richard Ellis Ltd., who moderated a panel discussion on the topic Wednesday at the Calgary Real Estate Forum, said so far this year absorption in the downtown market is 2.2 million square feet.

“To put it into perspective, the average over the last 15 years has been about 750,000 square feet annually. So unbelievable in that respect,” said Kwong. “Why is it happening? Probably two factors. One is if you talk to the oil and gas companies and energy-related services companies that are taking space ... they’re banking space again.

“The second factor is that there was an unusual amount of lease renewals that came up for expiry in the last couple of years and they took advantage of what was deemed to be a slower market.”

Kwong said the difference in the oil and gas industry between today and 30 years ago is that capital budgest and decisions involve billions of dollars being laid out over 10, 15 or 20 years.

Todd Throndson, managing director of Avison Young in Calgary, said many companies are making plans for the long term.

“They want to protect themselves for projects that they may have in six months, in 18 months, in 24 months. Down the road, they’re thinking big picture,” he said. “A lot of companies back in 2006 and 2007 were put in very compromising positions because of their real estate needs. They weren’t able to get the space they wanted. They had to pay a lot more money for the space than what would have been ideal.

“So a lot of them with strong balance sheets are making sure they protect themselves and get their space for their corporate needs going into the future.”

That’s reflected in the downtown office vacancy rate. According to Avison Young, it’s reached its lowest level since early 2009. Over the last three months, downtown office vacancy has dropped from 7.4 per cent to 6.2 per cent.

The addition of skycrapers Eighth Avenue Place and the Bow have not spiked the vacancy rate as was feared a couple of years ago. And demand is fuelling talk of more new development on the horizon.

Bryan Slauko, managing director of Base 10 Capital Advisors, said the amount of absorption implies significant growth in the number of office jobs in Calgary that would be needed to fill those seats. And filling all those seats requires new employees which would mean population growth in Calgary. But population growth can’t match that level of employment growth.

“It begs the question: if there’s not a ton of new office employment currently compared to the historical level to absorb all that office space then in my opinion it seems to mean . . . it’s for speculative growth. They’re planning on growing into that space in the future if the economy holds up and their hiring plans continue,” said Slauko.

“But that comes with a fair amount of risk to the office market because we see today in the economy there’s a lot of global economic uncertainty and I don’t believe Canada is immune and Alberta’s not immune because there’s a lot of risk to the natural resource prices that we depend on.”

And if the economy heads south then potentially a lot of office space will be coming back onto the market for lease.

A BRIGHT SPOT!

Resale home sales seen as bright spot
Garry Marr, Financial Post 
October 18, 2011

Existing home prices in Canada continued to increase last month, although the gains recorded were the smallest since January.

The Canadian Real Estate Association said the average price of a home sold in September was $352,581, a 6.5% jump from a year earlier.

The continued strength of the market in the face of a battered world economy was on display last month as sales rebounded from August, increasing by 2.7% on a seasonally adjusted basis. For the first three quarters of the year, existing home sales are now 1.2% ahead of last year's pace.

The Ottawa-based group, which represents about 100 boards across the country, said new listings have been flat for two months and markets have tightened but all signs indicate most jurisdictions are still in balanced territory.

The group says nationally the sales-to-new-listings ratio was 52.8% in September, up from 51.6% in August. CREA says almost two-thirds of Canadian markets have a sales-to-new-listings ratio of 40% to 60%, which is considered balanced.

"The Canadian housing market remains a bright spot against a backdrop of mixed headline news about the global economy," said Gary Morse, CREA president. "Low mortgage rates continue to draw buyers to the housing market, while recently tightened mortgage regulations are working as intended."

Adrienne Warren, an economist with Bank of Nova Scotia, noted that even as Canadians spend less on retail purchases, those low interest rates are enticing home buyers.

"Continuing uncertainty over the global economic outlook and highly volatile financial markets have yet to contribute to any notable slowing in Canada's housing market," says Ms. Warren.

Last month's numbers were boosted by a strong contribution from the country's largest market. Toronto average sales prices rose 8.9% last month from a year ago to $465,369 while sales activity was up 21.3% during the same period.

"It's pretty clear Toronto is the star of the national real estate scene at least in this act," said Phil Soper, chief executive of Royal LePage Real Estate Services. "The reality is while the world may be on shaky economic footing and there are scenarios where it would cause hardship to business in Toronto, the current reality is we got jobs back from the recession quickly and there has been some slight upward pressure on income and salaries."

The market also appears to finally have adjusted to new mortgage rules. The latest round of changes saw amortization periods lowered to 30 years from 35 years, reduced refinancing limits to 85% of a home's value from 90% and removed government insurance on homeequity lines of credit.

Mr. Soper said those moves, combined with rule changes in 2010 that forced condominium investors to have a minimum 20% down payment, had slowed down the market. "What we didn't want to see was speculative house flippers and that's been tightened up," he said.

Gregory K lump, chief economist for CREA, noted housing has remained stable in face of market volatility, which has contributed to Canadian confidence in the economy.

"Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market," he said.

Photo By: Fiona Katherine

UP YOUR ALLEY!

Most walkable neighbourhoods: Beltline bustles with some big-city hustle

By Tony Seskus,
Calgary Herald October 13, 2011

Sushi bars, bridal shops, nightclubs, art galleries, homeless programs, historic sites and yoga studios — a stroll through Beltline is unlike any other in Calgary.

It’s got a big-city feeling that’s bustling, vibrant and even gritty, sometimes within a single block.

“It’s one of the few places in Calgary where one can live without a car quite easily and it’s probably the best place to do it,” said Rob Taylor, an area resident since 1983 and community president.

“It’s fun to go outside and watch what’s happening when there’s a variety of people and a variety of things going on.”

On a sunny weekday afternoon, the streets are indeed alive.

Office workers, hipsters, a panhandler and two police officers walking the beat all momentarily share the busy corner of 10th Avenue and 1st Street S.W.

They are among the thousands of pedestrians who use Beltline’s sidewalks each day.

It’s little wonder that when the Herald used walkscore.com to get a sense of Beltline’s walkability, it rated “very walkable.” That means most errands can be run on foot.

Strolling with Bright Pryde of the Beltline Planning Policy Group last June, that much is obvious.

There are streetside businesses to satisfy nearly every consumer urge. And away from the bustle is Central Memorial Park, which includes a stylish garden cafe that would look at home in any major metropolitan centre.

The community thrives on visitors and its large population.

Beltline has nearly 20,000 residents, filling a densely populated neighbourhood of upscale condos, rental apartments, townhouses and a few single-family homes.

As day becomes night, crowds arrive in the neighbourhood to dine, drink and be entertained.

With so many eyes on the street, Pryde says she always felt safe on foot in the community.

“I used to live in this little building here — it’s kind of a sketchy corner,” said Pryde, pointing to a rental where she might hear arguments in the street at night. “But, you know, when I walked out onto the streets, I felt safe. I felt comfortable because I knew that the community was there with me.”

There’s no avoiding the crime statistics, but behind the headlines there’s been improvement.

Beltline had 47 street robberies in 2010, but that number is down nearly 30 per cent from 2008.

Car thefts and thefts from vehicles are also down significantly from 2008, coinciding with policing efforts in the community.

Trotting through Beltline, the community’s size is striking.

Yet its grid street system, a legacy of early planning, often makes it easy to find quick walking routes.

But there are challenges.

Walking conditions range from model sidewalks to rugged paths.

The best routes are wide, treed and have comfortable benches. They’re as good as any in the city.

But there are also instances where sidewalks are narrow, patched or crumbling. Some have utility poles or other obstacles that walkers have to navigate.

And, of course, thousands of vehicles pass through the community daily. Along the busiest roads, there’s the steady din of traffic.

Despite the beauty of Central Memorial Park, there are also no parks north of 12th Avenue.

The community association is hopeful that improvements will come along as the city looks to bolster walkability in the city.

While interest in the “urban lifestyle” is growing in popularity, Taylor acknowledges it doesn’t suit everyone’s needs. But there’s also great pride in the many things the community does offer.

“If you’re of an urban mindset, it’s fun,” Taylor said.

And as Pryde headed off to work down one of Central Memorial Park’s picturesque garden pathways, the community’s walk appeal was clear.

“I always hear people say that it’s impossible to live in Calgary without a car,” added Pryde, who is currently studying abroad.

“I always argue the opposite. You’ve got to pick the right community. No, you can’t live in Cranston without a car. But you could easily live (car-less) in the Beltline — and many people do.”

Photo By: RemotelyBoris

BLAZING AHEAD

Canada’s housing market steams ahead
Reuters  Oct 11, 2011

TORONTO — Canadian housing starts jumped much more than expected in September, helped by a surge in the condominium sector, suggesting Canada’s property boom stayed intact last month and should help the economy avert recession.

Canada Mortgage and Housing Corp. said on Tuesday that starts rose to seasonally adjusted annualized rate of 205,900 units last month. August starts were revised up to 191,900 from 184,700.

September starts far exceeded the consensus expectation of analysts, who had called for 188,000.

Driving the gains were a jump in construction of multi-residential buildings such as condominiums.

“Housing starts picked up in September due to an increase in multiple starts in the Atlantic region, Quebec and in British Columbia,” Mathieu Laberge, a deputy chief economist with CMHC said in a statement.

“Multiple housing starts are expected to move back toward levels consistent with demographic fundamentals in the near term.”

The agency said urban starts increased by 8% to 185,900 units in September, with multiple urban starts up by 14.2% to 118,000 units. Single family housing starts in urban areas decreased by 1.5% in September to 67,900 units.

Rural starts were estimated at 20,000 units.

CIBC World Markets economist Emanuella Enenajor said in a note to clients that while multiple starts are widely expected to scale down in the months ahead, residential construction could be a plus for GDP in the third quarter.

Canada’s economy contracted marginally in the second quarter, partly due to the supply chain impact of Japan’s earthquake and tsunami. There had been fear the economy could shrink again in the third quarter, meeting the textbook definition of a recession.

But recent data has been encouraging. A report on Friday showed Canada created six times as many jobs as expected in September, helped by an economy that is largely humming along even as other rich nations struggle with debt and slumping confidence.

Canada’s housing sector has played a major role in the recovery. The country avoided the subprime housing boom that drove the United States into recession and helped trigger the global financial crisis.

Property prices and sales briefly weakened after the crisis. But the Bank of Canada’s decision to cut interest rates to a record low, which pulled mortgage rates lower, fueled a fresh boom.

The housing boom was helped along by the fact Canada’s conservative banks escaped the crisis largely unscathed and were able to keep lending.

The fear now for many policymakers is a fresh asset bubble could be in the works.

A NEW PERSPECTIVE

Project Calgary will give new perspective on Calgary's neighbourhoods
By Tom Babin
Calgary Herald October 8, 2011

What would make your neighbourhood better?

It’s a simple question, but the answers are not. The answers come wrapped in expectation and are coloured by perception, history and experience. Still, the question should be asked. Without it, our city will never improve.

That’s why we’re posing it. It’s what’s driving Project Calgary, a new initiative of the Calgary Herald that kicks of today and runs for the next 100 days. In hundreds of ways, we will seek answers to that question, and we want your help.

At the heart of Project Calgary lies an ever-growing archive of data that we have spent months compiling. In nearly 50 different areas, we have collected data on Calgary’s 200 individual neighbourhoods that collectively shed never-before seen light on community life in the city. We have crime statistics, housing data, affordability indexes, and measures of neighbourliness and much more. Want to know how much parkspace your community has compared to your best friend’s? We’ve got that. Want to know where your neighbourhood ranks on an index of coffee shops? We have that too. Worried about growing enclaves of poverty, or the plight of seniors living alone? We have data that can shed light.

Over the course of the project, all of that data and more will be made available to everybody, as spreadsheets or in more easily understood maps and interactive charts, on our website. It’s a project of open data, so we want you to take it, interpret it, post it on your blog, share it with your friends on Facebook, and tell us what you think.

The data, however, is just the starting point. It will kick off conversations about how we can make our neighbourhoods, and thereby our city, better. Our journalists have spent months combing the data, looking for stories and trends that will illuminate, inform and perhaps even enrage all of us.

There are a few points to remember as we begin this journey. Calgarians like their city. A poll commissioned for this project found 83 per cent of people satisfied with the quality of life in the city. And Calgarians like their neighbourhoods even more — 85 per cent said they were satisfied with 39 per cent saying they were very satisfied. There is, however, room for improvement.

“I think a question like this shows that (Calgarians are) content,” said Jaideep Mukerji, managing director of Angus Reid, who conducted the poll. “It’s a positive feeling but it’s not necessarily a very intensely positive feeling with respect to Calgary in general.”

Affordability, for example, is still a concern for many Calgarians, and along with this comes questions of poverty, charity and community. Interestingly, our poll found the most important part of neighbourhood life to Calgarians is not safety or amenities, but the old-fashioned notion of neighbourliness.

“It’s the quality of your neighbours and the quality of your housing that really tend to drive overall satisfaction,” said Mukerji. “It’s very much ‘Do I live around nice people?’ and ‘Do I live in a nice place?’ And those seem almost banal, but they actually really do have a pretty big impact on people’s overall satisfaction with their neighbourhood.”

These are just some of the issues that will be addressed over the coming 100 days. We’re kicking off Project Calgary with a look at one of the most contentious areas of civic life: Transportation. Over the next two weeks, you’ll see data and stories related to walkability, traffic and transportation, and it’s sure to spark a discussion — as the launch this week of a new bike lane in the city has proved.

In addition to the stories, photos, maps and data you’ll see in the print edition of the Herald, our website will feature even more.

Project Calgary is intended to be an ongoing conversation about neighbourhood life, so we invite you to get involved. Share your comments on our blog, discuss the data, tell us why you love your community or what would make it better. Project Calgary is being set up as a living initiative, so if you have an idea for us to explore, or some data you think we should track down and share, let us know. Tell us about your community, share your photographs and take part in our regular live chats. This project is intended to be a journey, and we’d love some company for the ride.

LATE SUMMER BUILDING PERMIT BOOM

Developers give Calgary 'a vote of confidence'
By Mario Toneguzzi,
Calgary Herald October 7, 2011

A burst of late summer construction put Calgary among the country's biggest gainers in building permit values last month.

Statistics Canada reported Thursday that local building permit values soared to $461 million in August, an increase of 23.6 per cent from July and 77 per cent from a year earlier.

Susan Thompson, business development manager for real estate for Calgary Economic Development, said the numbers indicate "developers are giving Calgary a vote of confidence. It takes time to build a building, but they're thinking there's going to be the demand there.

"By the time they're complete, we're going to need these buildings," said Thompson.

Half of the 14 permit applications valued at more than $20 million this year have been for multi-family housing projects, said Thompson.

Building permits are a good indicator of the city's economy going forward, she said.

"It speaks to intention," she said. "They wouldn't build them if they didn't think there was going to be demand. They obviously feel the economy is going to keep growing and the demand's going to be there."

Building permit values through August in Calgary now top $3.4 billion, an increase of 36.8 per cent from the same period a year ago. The total is almost equally split between the residential and non-residential sectors. The residential sector has increased by 9.5 per cent and the non-residential sector is up 84.1 per cent.

Ben Brunnen, director of policy and government affairs and chief economist for the Calgary Chamber of Commerce, said the numbers reflect renewed confidence in the Calgary economy.

"When we see building permits in Calgary increase that's for the construction sector and that tends to be the sector that falls off first in a recession and comes on last in a recovery," he said. "So the fact that we're seeing these increases in Calgary particularly relative to the other cities suggest that there's a vote of confidence for Calgary's economy moving forward."

TELL ME A STORY

What's the real story of Canada's housing market?
Financial Post · Oct. 5, 2011

OTTAWA — Home prices rose during the third quarter of 2011, but the raw numbers may not be telling the whole story of the Canadian housing market, a new survey says.

The Royal LePage House Price Survey released Wednesday found that the average price of a home in Canada increased between 5.7% and 7.8% in the third quarter of 2011 compared with the same period last year.

The average price of a detached bungalow was $349,974, a standard two-storey home was $388,218 and a standard condominium was $239,300, according to the survey.

Royal LePage said that the rise in price defied expectations and suggested that record-low interest rates and a fairly stable Canadian economy have bolstered consumer confidence.

However, the third quarter of 2010 was a relatively weak period for housing prices, which makes the increase this year appear rosier than they are and may mask a decline in prices in the months ahead, it said.

“The strength in Canada’s national housing market conceals signs of predictable softening in some regions,” Phil Soper, president and chief executive of Royal LePage Real Estate Services, said in a statement.

“A broader slowdown is expected in the months ahead, but fears of a U.S.-style correction are completely unfounded.”

Vancouver had the highest priced homes in the country during the third quarter of 2011 and was the only city in the survey where the average bungalow or two-storey home cost more than $1 million.

Halifax, Montreal, Toronto, Saint John, N.B., and Ottawa all saw prices increase between 4.4% and 10.4%.

In Alberta, the volume of homes trading hands increased, but prices stayed soft, the survey found: Detached bungalows in Calgary fell 1% in the third quarter.

Victoria was similarly weak, with detached bungalows and standard two-storey homes falling two and 1.1% respectively.