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June 21, 2021 - Blog Article
Edmonton’s Multi-Family Properties Remain a Smart Investment


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The commercial real estate (CRE) market in Canada has remained strong despite the pandemic. Some of the best-performing properties in Edmonton are multi-family residentials, which remain affordable for both CRE investors and renters.

Lower Rents Drive Occupancy

Edmonton’s multires metrics are heading in the right direction, with lower rents driving occupancy and keeping the market strong. For example, renting one of Boardwalk REIT’s 12,500 units in Edmonton costs less than $1,200, which is lower than one would have to pay in Vancouver and Toronto.

The Edmonton 2021 Real Estate Forum revealed that landlords in the city collect 98-99% of rents, thanks to the assets’ affordability.

Mid-Market Low-Rise Buildings Show the Best Performance

Edmonton’s mid-level market hasn’t been struggling like its top-level counterpart. Instead, out of all its multi-family, office, industrial, and retail CRE properties, low-rise buildings show the best performance.

Once again, affordability is what drives the higher demand for low-rises. Their average rent in downtown Edmonton is $2.30 per square foot, while high-rise properties have an average rent of $2.75-$2.85 per square foot. As a result, experts predict a possible change in high-rise rents to make them more affordable.

The Apartment Sector Is Poised to Grow

Condos in Edmonton are facing some challenges, as single-family residential apartments continue to be more affordable. In addition, the apartment sector is poised to grow, with the city reopening after the pandemic and students returning to schools and universities.

In 2020, 46 transactions in the apartment sector amounted to a value of $684 million. Moreover, the sector saw a whopping 68% increase from 2019. This trend is bound to continue once the city becomes active again.

Downtown Edmonton should be the best spot for CRE investors, mainly because of the popular Ice District and Rogers Place. Mid-market low-rise buildings in such a lively location are sure to drive high profitability.

Profitability Issues Confronting Property Developers and Landlords

CRE developers and landlords face some profitability issues, as insurance, taxes, and renovation costs have increased, while rents have remained the same.

With a 49% increase in insurance, a 16% increase in property taxes (including recently-added carbon taxes), and higher costs of carpets, steel, and lumber; building and renovating properties has become a bit challenging. 

One solution is to build smaller, more affordable units, especially since more and more people are looking to live in smaller apartments. In addition, Alberta already sees higher demand for mixed-use spaces, as there’s a growing number of business owners in the province.

Summary

Canada continues to have one of the world’s strongest CRE markets. The CRE market in Edmonton has been some of the best-performing in Alberta during the pandemic and will continue to grow going forward. It offers excellent opportunities to CRE investors, especially those opting for low-rise multi-family properties.