Investors have been shying away from commercial real estate in Calgary, mostly because of a huge decline in office business.
On Thursday, RealNet Canada Inc. reported that 82 transactions, at least $1 mil each, took place in and around Calgary during the second quarter. The total amount changing hands, $343.7 million, was less than half of the 99 transactions which took place during the second quarter of last year.
“The effect of external market conditions has begun to influence investment activity in the greater Calgary area. This is evidenced by the lack of both high dollar transactions and a slowing of deal velocity,” according Paul Richter, in charge of research for the company.
Greg Kwong, the executive vice-president of the Calgary office for the commercial real estate firm CBRE’s, observed that buyers aren’t shying away from Calgary for the long run, regardless of recent sales drops in other areas.Kwong explained, “Everyone is saying ‘OK this is what Calgary does. You balloon for a number of years and then you bust for one or two and then you boom again for awhile.”
“In this slowdown, people are just saying ‘we still like Calgary and we’re not saying that it’s going to crash and hit the rock bottom’ but they are saying if they think there’s even a slight deflation in prices why would they buy now?”