Commercial Investor Report 2021 (Western Canada)

After posting $1 billion in regional sales volume in the first quarter of 2020, the Greater Edmonton Area was off to one of the strongest starts in recent years for commercial real estate when the pandemic hit. 

Second-quarter sales plummeted, and despite encouraging upward momentum in the third and fourth quarters, the

market finished the year with $2.2 billion in sales, down approximately 33 percent from 2019 levels ($3.3 billion).

Private equity was most active in the commercial market, driving approximately 53 percent of top ten sales across five asset classes in 2020, followed by end-users at 37 percent. While most investors were local/regional, approximately 40 percent of sales were from out-of-province, led by British Columbia and Ontario. The highest-priced sales occurring in the multi-family and retail sectors involved institutional investors based in Ontario, while the most expensive office sale involved private investors from British Columbia.

The aforementioned sales were valued at $305 million, $205 million and $100 million, respectively. Multi-family residential was quite strong out of the gate in 2020. Overall sales volumes rose year-over-year, with larger deals completed in the first quarter of 2020. Highrise sales were nearly five times higher in 2020 than the prior year, but again, the bulk was completed in the first quarter and pre-pandemic. This, while both walk-up and townhouse segments saw a decline in sales volume. Some of these deals have been pushed into 2021, which should bode well for sales in the year ahead. 

Economic stability will go a long way in improving consumer confidence and the overall picture for the commercial market in the aftermath of COVID-19. E-commerce is here to stay and will likely play a growing role in the future of retail. Trends toward pick-up and delivery, particularly in the retail sector, will accelerate. The industrial “last mile” will tackle logistical challenges in terms of getting parcels to destinations in high-density areas like the downtown core or alternatively outlying suburban areas. This segment of the market may see high-tech solutions with the introduction of drone deliveries for example.