Nowhere to go but up: Why Calgary’s real estate market is full of potential

Calgary’s landscape has seen a lot of change, destruction, and effort to rebuild over in recent years. From the 2013 flood to last year’s wildfires, nothing has forced Albertans to bounce back quicker than the damage to our cities and their communities.

While Calgary is still dealing with the impact of the recent energy sector’s downturn, the real estate market is holding its own - developers and investors bide their time and carefully assess opportunities, and high vacancy rates present buyers with an array of options. Some argue that the market is in a slump, but my view is that there’s nowhere to go but up. Here’s my two cents on why Calgary is still a great place to live, work & grow despite the downturn.

Calgary is Canada’s fastest-growing city

According to the most recent national census data Calgary’s census metropolitan area (CMA) has increased by 14.6% since 2011. This outpaces the national growth rate of 5.0%, as well as the population of Alberta which increased by 11.6% since the last census. This makes Calgary not only the fastest-growing city in Canada, but also boasting the largest migration and shows Calgary’s growth has persisted through the economic downturn, which was in full swing as the census was completed in May, 2016. Moreover, Calgary’s real GDP is expected to grow by 2.1% in 2017, with an expected retail sales growth rate of 1.8% and approximately 1.7% population growth.

The takeaway: What do all these stats mean? Calgary’s population continues to grow, and with that growth comes a demand for new urban and residential development, especially outside the downtown core. Investments in homes, infrastructure and transit will help connect existing real estate to new areas of development providing Calgarians with more options, and developers more opportunities.

The nature of work is changing & so will real estate

There are now more devices than people connected to the internet, a phenomenon known as “the internet of things”. Point-of-sale systems connect with warehouses, smart phones make it simple to compare prices across retailers, and HVAC systems are now automatic and controlled in real time. The relationship between tech and real estate continues to evolve, but evidence suggests that a market’s trend toward technological advancement is positively correlated with real estate performance.

As workforces becoming increasingly productive through working remotely, real estate needs will change, particularly for companies who are used to occupying office space 9 to 5. Even as Calgary’s economy begins to recover, many companies are realizing they can manage with less space and fewer people, which will in turn affect future real estate demands. Technologies like Google for Work allow staff to connect and collaborate from anywhere and everywhere, making the need for brick-and-mortar workspace less important, or at the very least changing how we use the office space.

For example, San Fran-based tech company RocketSpace is set to move into the former Encana Place building on 9th Ave. While running the space will only require 8-10 employees, the office will provide space for up to 1,000 startup clients to work and collaborate with fellow entrepreneurs, mentors, investors (Calgary Herald). Working closely with commercial landlord Aspen Properties allowed RocketSpace to design a space more attractive to technology firms and smaller, innovative companies.

9th Avenue SW downtown tower formerly known as Encana Place

The takeaway: Real estate needs in Calgary are changing. Tech will play integral role in real estate development and growth, and those who offer tech savvy, collaborative spaces will meet future buyers’ needs first, ahead of lagging competitors.

Opportunities reign for those who look ahead

Calgary’s real estate market has certainly seen its share of ups and downs over the years, and experience has taught investors to wait and see where the market goes before committing themselves to anything new. Oversupply of office space has not stopped some projects from being completed, especially in the downtown core where projects have been in the works year before the downturn hit. As of 2nd quarter 2016, approximately 2.3 million square feet of space was under construction, and it’s hard to miss the many cranes towering over the city as you drive into downtown.

Although buying has slowed significantly, those who are building office space now might enjoy an advantage in attracting tenants a few years into the future, offering the most modern space to the marketplace. Despite the high vacancy rate and grim economic forecasts for our city, few building projects have been stopped and investors remain optimistic about Calgary's long term future (CBC). Calgary’s market hasn’t completely dropped off foreign investors’ radars either - Chinese property inquiries shot up by 1,050% and 420% year over year in Calgary last August and September, respectively.

The takeaway: Calgary is still a destination for opportunity and still a desired location to start and grow your business. Every market offers opportunities for savvy developers and investors. Despite Calgary’s current concerns, there is room to grow. Advantage will go to those who keep their finger on the pulse of their future buyers’ needs.

While there’s no arguing that now is a challenging time for the Alberta real estate market, Calgary is nothing but resilient in the face of adversity and times of change. Only this province could come together to rebuild after flood, fire & even economic disruption. Overall, Calgarians should be optimistic about the market and be swift to adapt and take on opportunity as it presents itself.

To learn more, register to attend our upcoming real estate update where we’ll cover the latest trends affecting Calgary and Edmonton’s real estate markets with global speakers and a panel of local industry experts.

CALGARY - Click here to register

Thursday, June 15 @ Earl Grey Golf Club (3:30-7:00pm)

Chris Potter - National Real Estate Tax Lead, PwC Canada

Hazem Galal - Global Smart Cities & Open Data Leader, PwC UAE

Damien Mills - EVP & Managing Director, Canadian Brokerage, JLL

Rollin Stanley - GM, Urban Strategy, City of Calgary

Trent Edwards - COO, Alberta, Brookfield Residential

EDMONTON - Click here to register

Wednesday, June 14 @ Royal Mayfair Golf Club (3:30-7:00pm)

Chris Potter - National Real Estate Tax Lead, PwC Canada

Hazem Galal - Global Smart Cities & Open Data Leader, PwC UAE

Patrick Lindsay - Partner, PwC Law LLP

Darin Rayburn - President & CEO, Melcor Developments Ltd.

David Young - EVP, Managing Director, CBRE Ltd.

Simon O’Byrne - Vice President, Community Development Canada, Stantec

Also check out PwC’s real estate insights in our 2017 Emerging Trends in Real Estate report.