Why Retail & Commercial Investments Are Performing Well, Despite Economic Challenges

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Drastic increases have been seen in the volume of commercial real estate sales in Edmonton over the past year, with retail properties showing a strong performance.

Even with the Alberta economy taking a hit in late 2014 when oil prices dropped, commercial and retail investments continue to perform well. In late 2014 thousands of employees in the oil and gas industry were laid off, but signs of recovery started to emerge in late 2016.

In mid-2016, investors began to respond to the positive effects in Edmonton from the First Capital Brewery District and Rogers Place opening. In addition, accelerated leasing activity helps to bring investors back to the market.

Increase in Private Investment

Although institutional investors have become more cautious with their investment capital, new investment opportunities have begun to arise for high-net-worth individuals. This trend has helped to drive the market for the past few years, as many private investors have gained access to attractive financing with low interest rates.

Retail properties tend to remain a strong investment, regardless of the current economy. Even during tougher times, retailers have performed well, making the retail sector a good investment. Some investors expect lower prices during a slow economy, but this hasn’t been the case in Alberta for the retail sector or the commercial sector.

Growing Online Buying Doesn’t Slow Retail Down

The growth in online purchasing is real and now represents close to 10% of the overall purchases made in Alberta. However, the growth in e-commerce hasn’t become the threat to brick-and-mortar retail, as most believed it would become. Canadians continue to embrace shopping in physical stores and enjoying the experience of heading to a shopping mall.

This trend has resulted in traditional retail businesses remaining strong, which makes commercial retail property an advantageous investment opportunity for many investors. Much of the success within the commercial retail section is rooted in local neighborhood retailers dealing with essential goods and services, such as haircuts, doctors, dentists, grocery items and lower priced restaurants.

The new digitally-enabled shopping experience has become a popular way to connect brick-and-mortar with the online world. In fact, some believe that e-commerce can help to make traditional retail even stronger, as the in-store shopping experience continues to become more interactive and retailers continue to draw more customers into the stores with online promotions.

Summary

Economic issues haven’t kept the commercial and retail sectors quiet in Alberta, as traditional retail remains strong and the slow economy has even started to show signs of life once again. Investors looking to hedge their investment capital, while generating consistent returns might be best served by investing in Canadian commercial real estate in the months and years ahead.