August 2015 Alberta Economic Fundamentals

Ally

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During the 12-mo period (June 2014 - 2015) Calgary's office vacancy rate rose to 11.5% from 8.3% due to cost slashing

“During the 12-month period that ended at mid-year 2015, the vacancy rate rose to 11.5 per cent from 8.3 per cent due to a substantial increase in vacant sublease space on the market,” it said. “As a result of a steep decline in oil prices since the fourth quarter of 2014, large energy companies have employed several defensive strategies to reduce expenses.

“These actions include cancelling or deferring capital expenditures, laying off staff and placing unused space on the sublease market. Sublease space, as a percentage of downtown vacancy, rose nine percentage points year-over-year to 40 per cent.”

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Ally

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Oil prices this year have averaged $58.60 US a barrel, slightly above the former Alberta government’s budget forecast price of $54.84 for 2015-16. It could take as long as 2 years for oil markets to sort themselves out. Are you prepared to be pro-active during that period?

The Saudis have clearly dug in for the long haul. And here’s what’s really depressing: According to a research note published Tuesday by FirstEnergy’s commodity analyst, Martin King, it could take as long as two years before the market rebalances itself by non-OPEC producers decreasing production.

What this means, said King, is that oil prices could be stuck in the $45 to $60 US a barrel range until 2017, which also factors in more production from Iran starting in 2016. Oil prices this year have averaged $58.60 US a barrel, slightly above the former Alberta government’s budget forecast price of $54.84 for 2015-16.

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Ally

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Renters wanted: Calgary landlords remove 'no' from vacancy signs

For the first time in a longtime, Calgarians in the market for rental accommodations find themselves in the driver’s seat when it comes to supply and demand.

After several months of falling oil prices, rental prices are becoming more affordable and vacancy signs are no longer the mythical occurrence of years past.

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Ally

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The 5 reasons why IEA is seeing oil demand surging (remember our forecast in January at the REIN Workshops about demand increase in Aug?

OPEC reported yesterday that its production is at a three-year high. The US Energy Information Administration yesterday downwardly revised its oil price and US oil production outlook this year and next. Today, the third major report this week has been published by the International Energy Agency (IEA), which forecasts global oil demand rising at its fastest rate in five years in 2015. Despite this rise in demand, lower oil prices and spending cuts will continue to "take a toll" on non-OPEC producers, the agency said.

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Ally

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Calgary new home price index went UP

The federal agency reported Thursday that prices rose by 0.1 per cent from the previous month.

“Higher land prices were largely offset by builders reducing prices because of market conditions,” said Statistics Canada.

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Ally

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'Ghost Vacancies' haunt downtown Calgary as oil patch layoffs empty office buildings

CALGARY — Calgary’s landmark office towers are sitting increasingly empty as layoffs from the oil price collapse drive up vacancy rates downtown.

A report by real estate consultants Avison Young Wednesday said layoffs by major oil and gas companies in Calgary have helped push vacancy rates up to 11.5 per cent in the second quarter from 8.3 per cent a year ago, which has “weighed down” markets in Western Canada.

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Ally

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Job vacancies in Alberta reach close to 74,000

Data released Thursday show Western Canada — led by Alberta at 3.5 per cent and British Columbia, 3.3 per cent — had higher job vacancy rates than most of the country. Yukon, at 3.9 per cent, had the highest rate. The national rate was 2.6 per cent.

The job vacancy rate refers to the share of unfilled jobs among all payroll positions. Alberta had 73,700 job vacancies, second to Ontario’s 152,900, StatsCan said.

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DonCampbell

Investor, Analyst, Author, Philanthropist
Staff member
REIN Member
Looking forward to hearing directly from Todd Hirsch at this coming weekend's Commercial and Multi-Family Investing Summit! Always bring special insights that are great for the strategic investor. Info you will NEVER hear in the media.
 

Ally

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According to CREA, #Calgary housing market activity in line with long-term averages

In a report Friday, it said price growth in Calgary also slowed, the year-over-year increase of 0.14 per cent the smallest gain in almost four years. CREA’s price index, which measures the benchmark price representative of typical properties sold in a market, was $451,400 in July for Calgary.

Although sales in the Calgary area were down 19.3 per cent year-over-year, to 2,563 transactions, the rate of decline has eased from earlier in the year.

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Ally

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Oil sands brace for more misery as Canadian heavy crude plunges to lowest price in decade

CALGARY — Heavy Canadian crude slumped to its lowest level in at least a decade on Wednesday after Enbridge Inc closed two of its main pipelines in the United States because of a leak, piling fresh misery on Canadian oil companies that are close to producing at a loss.

Western Canada Select heavy blend crude for September delivery last traded at $20.75 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers, having settled at $19.80 per barrel below on Tuesday.

Earlier in the session it hit $21.75 per barrel below WTI, the widest differential since August last year.

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Ally

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“The lack of rental properties in the mid-range size and price is holding many people back from selling their homes in Calgary, however, as the pain deepens in the oil and gas market, many will be forced to sell as this downturn does not seem to be short in nature,” he said. “This adds risk to average price drops and demand, especially in the coming November to February market window.”

Its assessment of 15 metro markets lists Calgary as “low risk” while Toronto, Regina and Winnipeg were rated “high risk.” The review considered four factors — overheating; acceleration in house prices; overvaluation; and overbuilding — as of the end of March.

“The low price of oil has affected many different sectors of the economy, affecting employment and income growth, and increasing the unemployment rate. Weaker labour market conditions have also slowed migration to the region,” CMHC said of the Calgary-area market.

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Ally

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Manufacturing sales in Alberta rise for second straight month

The gains largely reflected higher sales of chemical products, which increased 12.5 per cent after falling 7.2 per cent in May, it said Friday. Those increases were partially offset by lower sales of fabricated metal products during the month.

Despite the June sales growth, year-over-year sales are down 13.8 per cent in the province.

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Ally

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Great news for Edmonton property owners as LRT north to NAIT to begin limited operations by start of school year

The City of Edmonton is implementing an approach to Metro Line operations that will open Edmonton’s newest LRT extension to public service on September 6, 2015.

Since July 31 the City has been working with its independent signal engineering consultant (Owner’s Engineer) Hatch Mott MacDonald (HMM), to develop an interim signalling solution that would allow the Metro Line to operate. The project team has developed and tested a ‘line of sight’ operation that is safe and suitable for public service and can be implemented immediately.

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Ally

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Heart of Alberta's oilsands feels pinch in real estate market

Information from the Canadian Real Estate Association indicates year-to-date MLS sales to the end of July, in the heart of Alberta’s oilsands, are down by 45.5 per cent from the same period a year ago — falling to just 632 transactions.

In comparison, Calgary has seen a 27.3 per cent decline.

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Ally

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Flames reveal details of $890 million downtown arena-stadium plan

The megaproject, dubbed CalgaryNEXT, would replace the aging Scotiabank Saddledome and McMahon Stadium.

Spanning several blocks near the Bow River, the plan includes a 20,000-seat event centre for hockey games and concerts. A neighbouring “multi-sport field house stadium” that envisions a translucent roof would house a FIFA-sized soccer field, a 400-metre indoor track and a regulation CFL field, with seats for 30,000 fans of the Calgary Stampeders.

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Ally

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Employment Insurance recipients in Alberta rise for eight straight month

Statistics Canada said the number of Alberta beneficiaries climbed for an eighth straight month in June, rising by 7.7 per cent, to 52,160. The largest increases occurred in occupations related to natural and applied sciences (13.3 per cent) and the processing, manufacturing and utilities sectors (8.5 per cent), the federal agency said.

Labour Minister Lori Sigurdson said the NDP government is continuing work on a job creation strategy but declined to offer details about how the plan — expected this fall — will address rising unemployment linked to low oil prices.

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Ally

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Well, that timing is not the greatest now is it. “The problem is, these companies just can’t stop producing. They still need to produce, they need to pay their bills, they need to ensure their bond covenants are not breached. So there’s a variety of reasons why companies need to produce.”

The price of West Texas Intermediate, the North American oil benchmark, went as low as US$40.40 in intraday trading after a U.S. Energy Information Agency report showed a 2.6-million-barrel increase in American crude oil inventories.

In a research note, Desjardins Capital Markets said the analyst consensus called for a 400,000 barrel drop in inventories.

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Ally

Research Assistant
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Employment Insurance recipients in Alberta rise for eighth straight month

Statistics Canada said the number of Alberta beneficiaries climbed for an eighth straight month in June, rising by 7.7 per cent, to 52,160. The largest increases occurred in occupations related to natural and applied sciences (13.3 per cent) and the processing, manufacturing and utilities sectors (8.5 per cent), the federal agency said.

Labour Minister Lori Sigurdson said the NDP government is continuing work on a job creation strategy but declined to offer details about how the plan — expected this fall — will address rising unemployment linked to low oil prices.

Read the full article here.
 

Ally

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Fort McMurray airport ready to soar despite oilpatch's rough landing

Fort McMurray is going full throttle as it embarks on another expansion of its airport in spite of a recent drop in passenger traffic and one airline ceasing operations in the oil boomtown of Northern Alberta.

The boom is certainly off the local and provincial economy since oil prices collapsed one year ago, leading to higher unemployment, postponed oilsands projects and huge cuts to spending by oil companies.

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Ally

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Alberta housing market forecast to rebound in 2016

The bank’s senior economist, Robert Hogue, is forecasting sales in the province to dip by 17.8 per cent this year from 2014 to 59,000 transactions — the largest drop in the country.

But Alberta is then expected to see the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.

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