At the close of the third quarter of 2023, the Edmonton commercial real estate market continued to build on strong mid-year investment volume with an additional $603 million in sales, bringing the year-to-date dollar volume to a five-year high at $2.36 billion.
All except the industrial asset class saw year-over-year increases in dollar volume and sales, with multifamily and retail properties leading transactional activity with $843 million and $373 million in total dollar volume respectively.
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Multi-family property investment up $190 million year-over-year
An additional 19 transactions worth more than $70 million rounded out the third quarter of 2023, bringing total investment to just under $749 million over 78 total sales. In 2022, there were a total of 58 sales totalling $559 million.
The largest transaction of Q3-2023 was the purchase of the 396-unit apartment building 121 West located in the Brewery District. The property was purchased at a price of $231,000 per suite which is among one of the highest price per door transactions seen so far this year.
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Commercial condominium sector sales reach an all-time high
With $34 million in transactions closing in Q3 alone, the total for 2023 so far is just over $103 million. This represents a five-year high, exceeding the total investment of $101.5 million in Q3-2019.
Total sales reached an all-time high of 149, predominantly the result of strong activity in industrial condos. Industrial condo transactions accounted for 49% of transactions for the year up to the end of September.
The price per square foot increased for retail condos to $419/sf from $379/sf year-over-year while industrial condo prices per square foot fell to an average of $207/sf from $225/sf the same time last year.
$51 million NAIT land acquisition helps land investment totals surpass previous high from 2019
The purchase of 26.7 acres at 11904 - 109 Street NW by The Board of Governors of the Northern Alberta Institute of Technology (NAIT) was a big ticket transaction for 2023 so far, with a value of $50.8 million ($1.9 million/acre).
The third quarter alone saw nearly $181 million in land transactions close for a land investment total of $380.4 million. This surpasses the previous high of $359.6 million by Q3-2019 and matches the five-year high of total sales in that same year at 113.
Retail sector sees marked increase in volume and number of sales year-over-year
By the end of September of this year, total dollar volume in retail transactions was $372.7 million up from $225.7 million last year. Total sales YoY are also up considerably from 39 to 56.
A big contributor to the increase in total dollar volume was the $69-million sale of the Millwoods Town Centre and Millwoods Town Centre Professional Building.
Edmonton Commercial Real Estate Outlook
Commercial real estate investment numbers continue to surpass expectations as they have risen well above pre-pandemic levels despite interest rate increases through late 2022 and into 2023.
Experts predict that there will be continued diversity in investor activity across all asset classes and that strong demand will continue in the commercial condominium market in particular. And with financial experts forecasting that interest rates have plateaued for the foreseeable future, commercial condominium sales are expected to be a significant investment sector into 2024 and beyond.
As we close out 2023 and head into the new year, the outlook for Edmonton commercial real estate is promising with good momentum. Edmonton’s relative affordability is a major asset, spurring interest in both commercial and residential real estate as people are flocking to the province in search of affordable opportunities.
Investors in particular have their eye on Edmonton for its affordability and young labour force. And as investment in Edmonton commercial real estate grows, it will in turn bring even more young professionals to the area as new jobs and opportunities arise.
Have questions about Edmonton commercial real estate? Wally has nearly 20 years of experience in both commercial and residential real estate in Edmonton and surrounding areas.
Call/text Wally today at 780.238.7384