The commercial real estate market is expected to show modest growth over the next couple of years now that the economy has turned the corner. That’s the word at the Edmonton Real Estate Forum going on downtown at the Shaw Conference Centre.
Delegates have heard that there is great value in the office towers downtown, and they’re prime for being converted to other uses. One estimate pegs Edmonton’s inventory costing one-seventh of similar buildings in Toronto and Vancouver.
“One of the things they have to manage is their downside risk,” Tom Redl, CEO of Chandos Construction told reporters Thursday. “So when markets fall, how much money can you lose? If you’re at a low cost base, you can’t lose nearly as much as you can in something that’s up high and quite inflated, and potentially a bubble. So the fundamental value is there.”
The economy began rounding into shape earlier this year, and has seen a couple of strong months in March and April. That’s encouraging to developers to dust off the blueprints, and start building again.
“It’s gaining momentum definitely,” Redl said. “More activity. As we’ve gone through the recession though in terms of the construction sector the government spending has been very important. A lot of schools have been built, a lot of infrastructure type work so that’s been very important, carrying us through the dip.”
“Now we are seeing the private developers get traction with retail, and potentially at some point we are already looking at converting some of the downtown obsolete office stock into alternate uses, like apartments, potentially senior’s housing, maybe hotels.”
Redl is basing that on a pair of independent forecasts that peg GDP growth in Edmonton at 2.4 and 2.5 per cent from ATB economist Todd Hirsch, and City of Edmonton’s John Rose.
“That’s stable consistent growth. There’s a couple of soft spots in different sectors but the foundation seems to be quite firm. We’re not ready to start uncorking the champagne but there are jobs.”