Purpose-Built Rental Activity Drives Alberta Multi-Family Market

Content of the article

According to data from an international commercial real estate firm, Alberta’s multifamily market is seeing record investment in purpose-built rentals.

Content of the article

JLL recently released its fall outlook, concluding that Alberta saw more than $1 billion in commercial real estate investment in the second quarter. About a third — $344 million — was in the multifamily segment.

Content of the article

With the rise in rental demand, Calgary has seen growing activity, says Samuel Dean, senior vice president of capital markets for multi-family housing at Edmonton-based JLL.

From April to the end of June, 14 transactions were concluded for a value of more than 164 million dollars. The biggest was a three-property deal worth $138 million.

Activity in the second quarter exceeded that of the first three months of the year when four transactions took place for a value of approximately $50 million.

The local market has seen “record demand for rental apartments despite several new projects coming on the market,” he says.

Content of the article

Due to high demand, developers reduced incentives, which increased rents.

Investment in Edmonton in multi-family rental units also increased with an even higher volume than in Calgary. In total, in the second quarter, 24 deals closed with more than $185 million, “nearly doubling the volume of the first quarter,” he says.

The largest transaction in Edmonton was the sale for $90 million of the new downtown purpose-built rental tower, the Augustana, which has 240 apartments.

Both markets have seen strong rental demand due to improving economic conditions amid higher borrowing costs for the property market. In turn, those conditions should lead to even higher rents and reduced vacancy in the fall, he adds.