Unprecedented 51 retail projects in Calgary under construction or proposed – More than 13.2 million square feet of new development

The Calgary retail market through the first three-quarters of the year continues to demonstrate both continuing growth and strong optimism, says a new report by Colliers International.

The overall vacancy rate for Calgary remains relatively unchanged at a mere 1.92 per cent, one of the lowest vacancy rates in North America. And Colliers said it is expecting overall vacancy levels to reduce to 1.75 per cent by mid-year 2014, which will put upward pressure on rental rates throughout the market.

“Calgary is a growing city with a thriving economy,” said Krystyn Gatto, an associate specializing in retail leasing for Colliers in Calgary.

“The city has experienced a strong and consistent population growth pattern that should continue for the foreseeable future. This growth coupled with high disposable incomes and our propensity to spend makes Calgary a ripe retail market. Calgary consumers have international brand recognition making our market a natural fit for retailers that have not yet arrived. Further, our Alberta entrepreneurialism can be seen in the spawning of new local concepts. Many Calgarians are not only happy to see these new ideas, but are now seeking them out.”

The Colliers report said home grown as well as international retailers have recognized the strong market fundamentals of the Calgary market and the influx of new retailing formats is expected to continue well into the future.

“To address the continuing expansion of existing retailers, developers have proposed an unprecedented number of new projects for Calgary, many in mixed-use format in the inner city,” it said.

“To match the ever-increasing consumer demand for retail goods and services in Calgary, retailers continue to seek quality sites and projects throughout all quadrants of Calgary. In response to this demand, developers have under construction or proposed an unprecedented 51 retail projects totaling over 13.2 million square feet of new projects throughout the Calgary marketplace.”


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Strong economy to help fuel demand

A clearly positive forecast for Calgary’s real estate market is being given by a federal agency.

“Up, up, up,” is how senior market analyst Richard Cho characterized predictions at the recent 2013 Alberta Housing Outlook Conference by Canada Mortgage and Housing Corp.

“For next year, many of the factors that are so important for housing are expected to continue to support housing activity in 2014 — growth in employment, growth in income and strong in-migration flow,” said Cho.

Steadily growing employment and lower unemployment rates compared to other parts of Canada, coupled with higher wages, are attracting migrants to the city in record numbers, he said. This is helping push housing demand, with prices and construction starts of homes predicted to climb in the coming year.

Cho expected the Calgary census metropolitan area to see steady gains in employment growth by the end of 2013 and into 2014, with growth sitting at 2.8 per cent this year and 2.5 per cent next year.

The area includes surrounding cities and towns as well as Calgary.

Average weekly earnings are expected to grow by five per cent for the year to date, settling around $1,100 per week compared to the national average of about $900 per week.

Calgary’s labour market will likely remain hard at work, with the city’s unemployment rate of five per cent, seasonally adjusted, sitting about two percentage points lower than the national average of seven per cent.

The city continues to attract new residents, perhaps attracted by these higher wages and lower employment rates, said Cho.

Net migration — people moving to the city minus those leaving — is expected to post another record year in 2013, with a forecast of 30,000 people moving to the province, just topping 2012’s record. CMHC expects net migration to tail off a bit to 23,000 people in 2014.

Demand for resale homes will likely continue to grow, says the federal agency. Total sales of MLS-listed resale homes are expected to continue to grow, rising from 22,466 in 2011 and 26,634 in 2012 to 29,200 by the end of 2013 — topping out at 30,000 in 2014.

Likewise, the average price of these homes will likely grow to $447,000 next year, up from $436,500 this year.

The new home market will likely grow to 6,500 construction starts of detached single-family homes, up 300 starts from 6,200 predicted for 2013. Construction starts for multi-family housing is expected to show a much bigger jump, likely rising to 6,600 starts next year compared to a predicted 5,500 starts this year.

Meanwhile, even while the vacancy rate is expected to improve slightly to 1.2 per cent in 2014, down from 0.8 per cent this year, the cost of renting an average two-bedroom unit is expected to climb to $1,280 per month in 2014, up from $1,230 per month this year.


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