1. business and industrial
2. construction

MARKETBEAT
OFFICE SNAPSHOT
EDMONTON, ALBERTA
Q1 2015
A Cushman & Wakefield Research Publication
The trickle-down effect of lower oil prices can
now be seen in the Alberta’s most recent
economic data. However, the statistics in
Edmonton and Calgary are not necessarily
moving in the same direction. Annualized
housing starts in Edmonton for the months of January and February
have posted record highs while Calgary housing starts have fallen to
their lowest levels in four years. Unemployment numbers are also
slightly lower in Edmonton than in Calgary. This indicates that the
workforce composition in Calgary is more prone to the direct impact
of productivity drop in the oil industry, than in Edmonton. Head
office and administrative layoffs are the early signs of a slowdown in
the market. The early indicators on the operations side, which can
be seen in the drilling rig utilization and capital investment, have also
been trending down over the past six months. To date this has not
translated into lower employment or activity in the Edmonton market
as of February. These are all signs of a normal market correction and
should be taken in the context of not only the future outlook but the
past performance of the Alberta economy. Over the past year, the
production of refined petroleum products in Alberta has increased by
2.1% and the overall employment has increased year-over-year by
36,700 jobs. Alberta’s heavy crude remains in high demand from oil
refineries in Alberta, mid-continent and southern U.S., and this
demand has kept Albertan pipelines at full capacity. Agriculture and
forestry industries have also been outperforming prior years, due to a
100% increase in beef prices over the past two years and lumber
production increasing 18% in the past year due to the weakness in the
Canadian dollar and the continued strength in the U.S. housing
market.
Library, Royal Alberta Museum, Art District, the Galleria, North
Learning Centre for Norquest College, MacEwan University’s Centre
for Arts and Culture, a 26-storey Delta Hotel, and multiple residential
high-rises being built downtown. To say the downtown core’s future
looks bright is an understatement to developments currently in the
pipeline.
As a result of the new construction, a number of building owners are
upgrading existing office towers to attract new tenants and retain
existing ones. A few office buildings currently under major
renovations include Capital Place spending $6 million, and 9Triple8
Jasper spending $8 million. We expect more landlords of existing
class A towers will follow by investing significant capital expenditures
towards building improvements in the next 2-3 years.
STATS ON THE GO
Q1 2014
Q1 2015
Y-O-Y
CHANGE
9.9%
11.6%
1.7 pp
$19.98
$19.48
-2.7%
(61,387) (118,641)
(57,254)
Overall Vacancy
Direct Asking Rents (psf/yr)
YTD Absorption (sf)
12 MONTH
FORECAST
DIRECT RENTAL VS. VACANCY RATES
$40.00
15.0%
$30.00
psf/yr
ECONOMIC OVERVIEW
10.0%
$20.00
5.0%
$10.00
$0.00
0.0%
2011
2012
2013
DIRECT GROSS RENTAL RATE
2014
2015Q1
DIRECT VACANCY RATE
EDMONTON OFFICE ACTIVITY
NEW SUPPLY
0.8
0.6
msf
In the first quarter of 2015, the market lost momentum with overall
absorption coming in at negative 118,641 square feet (sf). This
negative absorption was driven by class B buildings in the downtown
core, 124th Street, and West End. There was high demand for class A
in Downtown and Summerside, with 100,000 sf being leased in these
two areas. The citywide vacancy rate increased by 0.6 percentage
points from last quarter, and by 1.7 percentage points from one year
ago. Direct asking rates currently average $19.48 per square foot
(psf) citywide.
0.4
0.2
0.0
2011
OUTLOOK
2012
2013
2014
2015Q1
Anticipation for new downtown office towers will steadily grow as
new buildings begin to take shape on the Edmonton skyline. Adjoined
with this is the development of the new: Arena, Brewery District,
Cushman & Wakefield Edmonton
Suite 2700, 10088 – 102 Avenue
Edmonton, AB, T5J 2Z1
www.cwedm.com
For more information, contact:
Cushman & Wakefield, Office Team
+1 (780) 420 1177
office@cwedm.com
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
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EDMONTON, ALBERTA
SUBMARKET
INVENTORY
OVERALL
VACANCY
RATE
Financial Core
9,803,866
Government
CENTRAL DISTRICT
UNDER
CONSTRUCTION
YTD
CONSTRUCTION
COMPLETIONS
CURRENT QUARTER
ABSORPTION
12.9%
DIRECT
VACANCY
RATE
11.5%
YTD OVERALL OVERALL WTD. AVG
ABSORPTION ALL CLASSES GROSS
RENTAL RATE*
(98,818)
$40.44
DIRECT WTD. AVG.
CLASS A GROSS
RENTAL RATE*
1,104,000
0
(98,818)
5,859,905
3.3%
2.8%
0
0
2,428
2,428
$32.21
$34.14
15,663,771
9.3%
8.2%
1,104,000
0
(96,390)
(96,390)
$38.44
$41.74
$42.25
124th
Street
1,595,866
22.3%
18.7%
0
0
(52,935)
(52,935)
$31.47
$31.94
149th
Street
1,165,190
11.2%
10.8%
0
0
7,037
7,037
$30.35
$37.97
West End
1,918,365
13.0%
11.9%
0
0
(23,888)
(23,888)
$29.22
$36.12
Kingsway
740,120
10.0%
6.7%
0
0
3,377
3,377
$31.29
$36.26
Whyte Avenue
514,168
12.2%
12.2%
0
0
3,923
3,923
$31.57
$36.07
3,008,860
16.2%
13.3%
260,000
36,400
(6,395)
(6,395)
$31.48
$33.59
753,462
10.5%
8.7%
0
0
51,425
51,425
$37.29
$37.29
1,320,694
15.1%
15.1%
0
0
(4,795)
(4,795)
$33.76
$38.19
11,016,725
14.9%
13.0%
260,000
498,189
(22,251)
(22,251)
$31.36
$34.51
26,680,496
11.6%
10.2%
1,364,000
498,189
(118,641)
(118,641)
$35.09
$38.65
Southside
Summerside
Eastgate
SUBURBAN DISTRICT
TOTALS
* RENTAL RATES REFLECT ASKING $PSF/YEAR
MARKET HIGHLIGHTS
SIGNIFICANT Q1 2015 LEASE TRANSACTIONS
SUBMARKET
TENANT
BUILDING CLASS
Centre 170
West End
Black Veatch
Class B
11,300
College Plaza
Whyte Ave
Cap Inc
Class B
4,700
Village of Blackmud Creek
Summerside
Bri-Chem
Class A
5,190
Oliver Building
Financial Core
Origami
Class B
6,975
SIGNIFICANT Q1 2015 SALE TRANSACTIONS
SUBMARKET
BUYER
PURCHASE PRICE / $PSF
Guardian Building
124th Street
Undisclosed
$20,000,000
SIGNIFICANT Q1 2015 CONSTRUCTION
COMPLETIONS
Commerce South II
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Southside
TBD
Q1 2015
SIGNIFICANT PROJECTS UNDER
CONSTRUCTION
Allendale Professional Centre
SUBMARKET
MAJOR TENANT
COMPLETION DATE
Southside
Medical
Q2 2015
60,000
Allendale Office Building
Southside
Provincial Government
Q1 2016
60,000
Brewery District
124th Street
TBD
Q1 2016
80,000
Edmonton Business Campus
Southside
TBD
Q2 2016
60,000
Kelly Ramsay
Financial Core
Enbridge
Q3 2016
550,000
City of Edmonton
Financial Core
City of Edmonton
Q1 2017
554,000
SQUARE FEET
SQUARE FEET
80,000
BUILDING SQUARE FEET
(% LEASED)
36,400
BUILDING SQUARE FEET
(% LEASED)
* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS
Cushman & Wakefield Edmonton
Suite 2700, 10088 – 102 Avenue
Edmonton, AB, T5J 2Z1
www.cwedm.com
For more information, contact:
Cushman & Wakefield, Office Team
+1 (780) 420 1177
office@cwedm.com
The market terms and definitions in this report are based on NAIOP standards. No
warranty or representation, express or implied, is made to the accuracy or completeness
of the information contained herein, and same is submitted subject to errors, omissions,
change of price, rental or other conditions, withdrawal without notice, and to any special
listing conditions imposed by our principals.
© 2015 Cushman & Wakefield, Inc. All rights reserved.
2