The Edmonton market for new condominiums is “on life support” and sales have dropped in parts of the city, an official with commercial real estate company CBRE says.
Paul Chaput, senior vice-president of CBRE’s national apartment group, told an industry panel discussion Tuesday he has talked to developers in south Edmonton with monthly pre-sales of less than one unit a month, compared to about two units in good times.
“(Condos are) on life support. It’s a pretty tough slog,” he said at an event run by the Edmonton chapter of NAIOP, an association for companies in the commercial real estate field.
“We really don’t have an investor condo market. It’s really first-time buyers and downsizing couples.”
A report released last week by the Realtors Association of Edmonton predicted average condo prices will drop this year by 1.9 per cent after declining three per cent between December 2016 and last December.
One obstacle for buyers is the tougher borrowing rules introduced last fall to keep the Canadian market from overheating, Chaput said later.
The slow pace of sales needed before a new building can be constructed affects purchasers who might be stuck for years with a deposit on a place that doesn’t exist, he said.
“Our condo market has never really recovered from the condo craze of 2006-07,” he said, referring to a time when prices rose about 40 per cent and people lined up overnight to put deposits on some developments.
“There’s investors left holding the bag from those days, and it’s never really recovered.”
One bright spot is the Ice District around Rogers Place, where luxury condos offer proximity to the arena and hotel amenities unavailable elsewhere in Edmonton, Chaput said.
Another issue for the city is the challenge of attracting and keeping companies that could be lured to surrounding counties to save on taxes and other costs, said Evelyn Stolk, associate vice-president, industrial, at Colliers International.
“Primarily, it’s economically driven, when you’re taking a 400,000-square-foot building and right across the avenue in the county taxes are lower.”
She know of a group looking at coming to the region that will need up to 800,000 square feet, but isn’t sure if it will set up in the city or outside.
“Can (the city) get creative? Can they postpone taxes or provide deferments so landlords can get competitive?” she asked.
“It’s interesting to see how it gets addressed, or will we continue to lose industrial?”