CALGARY — Employment and population growth in the Calgary region will spike rental demand and lower the city’s vacancy rate.
Sam Kolias, chief executive of Calgary-based property manager Boardwalk Real Estate Investment Trust, said its current occupancy rate is probably the highest it’s ever been at the 97.5-98 per cent range across the portfolio.
“We have on average higher occupancy than the marketplace because we’ve been more competitive and flexible with our price,” said Kolias prior to the REIT’s annual general meeting in Calgary on Thursday.
“As a landlord, we hope that inventory will be absorbed this year and the statistics reflect that it could be if we continue to see the trends of more in-migration and job creation and population growth that we are currently seeing right now (in Calgary and Alberta).”
In the first quarter of this year, Boardwalk’s revenue was $102.6 million, down 1.5 per cent compared with the same quarter last year. Its average stabilized rent was $988, down $15 and its funds from operations was $28.1 million for the quarter, which was off 3.5 per cent from a year ago. Per unit FFO was 54 cents, down 1.8 per cent.
At the end of March, Boardwalk had 35,277 units in its portfolio, 5,234 of which were in Calgary and area.
Units in the REIT were up 46 cents or 0.97 per cent to $48.09 at the close of trading Thursday on the Toronto Stock Exchange.
Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said the agency is currently conducting its regular rental market survey for April and the results won’t be available until June.
“But just from what we’ve been hearing and what we’ve been seeing so far, we’re anticipating rental demand to improve throughout this year,” said Cho. “In October the vacancy rate was 3.6 per cent. So we do expect to be a bit lower than that in October of 2011.
“One of the main drivers for the rental demand that we are expecting to see this year is increased net migration levels. Generally when people move to a new city they typically tend to rent before they buy. So with the labour market improving especially in the energy sector that should draw more people to our province and to this region and with that contribute to higher demand for rental accommodations.”
According to the Conference Board of Canada, the Calgary census metropolitan area will see employment growth of 3.0 per cent this year followed by annual growth rates of 3.8 per cent, 2.4 per cent, 2.1 per cent and 1.8 in the following years to 2015.
That employment growth will lead to more people moving to the region. The conference board forecasts 1.7 per cent population growth this year followed by 2.1 per cent. 2.0 per cent, 2.0 per cent and 1.9 per cent annual growth in the following years to 2015 with the city’s population reaching 1.368 million by then.
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