October 2009

[Ally]

Office Vacancies to double in Downtown Calgar in `10: Avison Young

CALGARY - Calgary`s downtown office market is in for some dramatic changes in the next few years as more new office space is completed.

According to commercial real estate firm Avison Young, it is forecasted that the downtown office vacancy rate will close this year below six per cent, and just over 10 per cent including sublease space, but will double in 2010.

The current vacancy rate including the sublease market is 8.3 per cent, said Avison Young.

"Sublease space available in the downtown market could potentially double by spring 2012 if current economic conditions continue," said the company in its third quarter 2009 office market report. "The biggest reason for this being the fact that EnCana will complete their move up into the Bow between second quarter 2011 and first quarter 2012, and their existing 1.7 (million square feet) will be placed on the sublease market."

Avison Young said there are eight office building currently under construction in the downtown containing 5.7 million square feet. They include Palliser South, Penn West Centre West, Le Germain, Centennial Place East and West, Jamieson Place, Eighth Avenue Place East and The Bow.

Read the full article here.

 

[Ally]

Alberta Revises Royalty-in-Kind

Alberta announced amendments to its controversial bitumen royalty-in-kind scheme, issuing a revised request for proposals Monday that extends the commercial period to 2018 and allows for phased construction of upgraders.

The policy will divert up to 75,000 barrels per day of bitumen from Alberta`s oilsands from flowing south to upgraders in the United States with the government accepting the unprocessed product as royalty, instead of cash.

"This initiative will add value to the bitumen resource, diversify our economy, keep jobs in the province and will produce larger total energy revenues for Alberta," Energy Minister Mel Knight said in a statement. "The changes we made to the RFP are relatively minor, but illustrate our commitment to listen to stakeholders, take firm action and prepare the province for future economic growth."

Premier Ed Stelmach`s Conservative government announced the bitumen royalty-in-kind proposal in March during a time when nearly a dozen upgrader projects and proposals were put on hold when the price of crude plunged.

Adding to the billions of dollars in delayed or shelved projects was the announcement in July by oilsands company Suncor Energy Inc. it would be delegating new production from its proposed Firebag 3 project to U. S. refineries already equipped to process the tar-like substance into products such as gasoline or diesel. Suncor also put its Voyageur upgrader on indefinite hold.

Read the full article here.

 

[Ally]

Construction pace picks up Steam in City

With land and housing inventory on the decline, builders able to get their hands on some extra land were able to respond to a healthy increase in homebuyer interest.

Work started in September on 616 single-detached homes in Calgary and area -- the strongest single month since 680 starts were recorded in October 2007, says Canada Mortgage and Housing Corp.

Dave Rickett, sales and marketing manager for Shane Homes, says the company had a solid month because of its inventory of land.

"I don`t think everybody had a good month," he says. "It`s mostly the builders who have the land that are enjoying the turnaround in the market."

The starts reported last month were from sales that were closed in the previous two to three months.

Read the full article here.

 

[Ally]

Recreation Property Market expected to regain ground

A lack of interest in recreation or resort property is a "temporary condition," says a planning firm executive.

The issues clouding the rec property sector can be traced to a lack of consumer confidence based on current economic conditions, says Joe Miotto, vice-president of planning for NORR Architects and Planners. It will take a couple of years before the industry regains much of the ground it has lost, he says.

Miotto was one of several industry insiders speaking at the recent Canadian Resort Investment Conference in Calgary.

Several projects have gone into receivership, or been shelved or cancelled, in the wake of the global recession and the reining in of spending by consumers.

"In many cases, the prospective real estate purchasers have the

funds, but have become more conservative about real estate investment, perhaps due to worries associated with job loss, falling stock market prices and similar economic factors which reduce their confidence in real estate spending," says Miotto.

Read the full article here.

 

[Ally]

Calgary, Major Cities driving Housing resale rebound: CREA

CALGARY - Spurred by sales in Calgary, Vancouver and Toronto, national resale housing activity climbed to the highest level of any third quarter on record this year, says the Canadian Real Estate Association.

The association said today that MLS home sales totalled 135,182 units in the third quarter of this year, the most ever for the period from July to September. The number of transactions was up 18 per cent from the third quarter of last year, which represented the biggest year-over-year increase since early 2002.

"Momentum for sales activity remained strong throughout the third quarter," said Dale Ripplinger, CREA`s president. "Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market."

Read the full article here.

 

[Ally]

Oil Price gains wiped out by Dollar, low Natural Gas

Alberta`s cash-strapped government stands to gain billions of dollar from surging oil prices, but it`s almost completely offset by the higher Canadian dollar.

And after factoring low natural gas prices, the provincial Finance Department is still more than $2 billion in the red, based on the year-to-date average price for each commodity.

Oil prices briefly topped $80 US a barrel on Tuesday for the first time in almost a year, before falling back to $79.09, in a sign that global recession may be starting to ease.

Every dollar change adds $143 million to provincial revenue estimates, which means the government is up about $1.4 billion on its budgeted$55 oil price--crude has averaged about $65 since the beginning of the fiscal year, starting April 1.

But the surplus is almost completely chewed up by the rising Canadian dollar, which has cost the treasury about $1.3 billion in the same period. With lower natural gas prices, which account for about two-thirds of Alberta`s resource revenue, the province is still out about $2 billion from its first-quarter revenue estimates.

Read the full article here.

 

[Ally]

Oil, Gas Well drilling hits `Bottom,` Precision Trust says

EDMONTON - Canada`s hard hit oil and gas sector has "reached a bottom" but it is too early to predict a recovery is on the way, Precision Drilling Trust said Thursday.

The country`s largest oil and drilling contractor said the number of working rigs rose in both Canada and the U.S in its third quarter.

"In Canada, coming out of the spring break up, Precision returned rigs to work and currently has 60 drilling rigs working," the company said in a news release.

"Precision believes that we have reached a bottom in Canadian activity. One of the reasons for this belief is that Canadian customers are interested in locking in today`s depressed day rates for the upcoming winter drilling season."

But the company said that despite encouraging customer demand in response to rising oil prices and shale gas activity "it is far too early to make the call for a meaningful recovery."

Read the full article here.

 

[Ally]

$12M to Revitalize Edmonton`s `Special Needs` Neighbourhoods

EDMONTON — The city wants to spend more than $12 million luring new businesses and residents to seven distressed inner-city Edmonton neighbourhoods in hopes of reversing their decline.

The three-year program would give money to housing developments, companies that move into vacant space or construct something new, and firms that fix up their building`s facade.

The scheme, given tentative approval Wednesday by council`s executive committee, is aimed at revitalizing pedestrian-oriented "main streets" such as Chinatown, Alberta Avenue, Beverly and Inglewood, says a city report.

It must still be passed by council as part of the 2010 budget.

Details include:

— $7,000 for apartments or row housing ($12,000 if they`re part of a housing-commercial project), for a total of $2.5 million a year.

Read the full article here.

 

[Ally]

Alberta`s Economy to rebound, grow 3.1% in 2010: Scotiabank

CALGARY - Alberta`s economic recovery in 2010 will be bolstered by continued price appreciation for commodities, strengthening non-residential construction and buoyant infrastructure investments.

In a report released today, Scotiabank said the province will likely see a 3.1 per cent growth in GDP in 2010 following a 2.5 per cent loss this year during the economic recession.

The report said fixed capital investment amounts to almost 30 per cent of Alberta`s GDP.

"Though the capital project base eroded considerably over the past year, a turnaround is already underway," said the report. "Lower construction costs, combined with favourable lending rates have put a number of projects back on track. The province has seen a multitude of oil and gas mergers and acquisitions — leading most jurisdictions in 2009 year-to-date — that have consolidated the industry and a number of projects.

"This trend is expected to continue into next year as foreign interest increases. A number of high profile energy projects will be gaining momentum going into 2010."

Read the full article here.

 

[Ally]

Korea moves in

South Korea`s state-owned oil company struck a deal to make its most expensive acquisition to date yesterday, agreeing to buy a Canadian energy company in a $4.1-billion takeover as it tries to hit an ambitious production target.

Korea National Oil Corp. has agreed to pay Harvest Energy Trust shareholders $10 a share, or $1.8-billion, and soak up its $2.3-billion in debt, which had been weighing down the company`s prospects. The price is a 37% premium over Harvest`s closing price on Wednesday.

"[KNOC] knew what they wanted," said John Zahary, Harvest chief executive. "This particular party was very motivated."

Indeed, Korea is the world`s fifth-largest petroleum importer, and the seventh-largest petroleum consumer, according to KNOC`s website.

The country`s "risk-management ability related with oil crisis [sic] is rather poor," KNOC said on the site, noting the oil shocks of the 1970s "affected [the] national economy seriously."

Read the full article here.

 

[Ally]

Canada vs. U.S. - The New Reality

Yasmin Denner remembers the tough questions when she bought her first house in Toronto in the 1990s.

"I had 15% down but that wasn`t enough. They wanted to know where I`d gotten the money from," said the self-employed IT specialist with a laugh as she recalled Canada`s borrowing environment.

Flash forward 15 years. She and her husband Trevor moved to the United States, settling in the suburbs outside of Washington D.C. where they bought a relatively spacious 3,000 square foot home for their future family of three.

As the U.S. house market roared, and credit was easy to come by, Ms. Denner said she saw more than a few neighbours pull up stakes and buy twice as much house only to find themselves in trouble a few years later when the market went sour.

"I have a friend who was at a dinner party at one of these McMansions, something like 6,000 to 8,000 square feet. She asked why it was so cold in the house and was told it was too expensive to heat," says Ms. Denner.

Read the full article here.

 

[Ally]

Suncor Unvails New Tailings Pond Technology

CALGARY -- Suncor Energy Inc. is moving forward on a new tailings pond technology it believes will rapidly speed up its ability to reclaim the areas of northern Alberta it has strip-mined as it extracts bitumen buried beneath the Earth`s surface.

Tailings are a toxic byproduct in oil sands mining operations. They are a mixture of fine clay, sand, water, and residual bitumen that are contained in giant ponds. Before an oil sands operation can reclaim the area it has mined, the tailings have to dry, a process that now takes decades. When the tailings are dry, the companies rebuild hills and wetlands, plant trees and other vegetation and reintroduce animals.

However, Suncor on Friday submitted a regulatory application for a system, called "tailings reduction operations" it expects will accelerate the drying step.

It wants to start implementing the new technology in 2010, should it receive approval from regulators. "This drying process occurs over a matter of weeks, allowing more rapid reclamation activities to occur," Suncor said in a statement.

As tailings settle in the ponds, portions eventually form into so-called mature fine tailings. Suncor says its new technology will mix mature fine tailings with a binding agent called polymer flocculent, and then deposit that in thin layers over sand beaches with shallow slopes.

Read the full article here.

 

[Ally]

For Family behind Condo Towers, Downtown`s a draw

At 26, Raj Dhunna is a friendly, fresh-faced young MBA student at the U of A.

While many of his classmates will soon be out hunting for jobs, however, Dhunna`s future is already mapped out. When he`s not hitting the books or off on an international study tour--his MBA class just returned from Shanghai --Dhunna has other obligations.

As project manager for Regency Developments -- a local real estate development firm headed by his father, Rakesh--Dhunna oversees not one, but three major downtown condo projects.

The most advanced of the three, Quest, is a 22-storey, 116-unit tower at the southwest corner of 104th Avenue and 105th Street. It`s due to be completed in April. Located across the street from MacEwan`s main campus, Quest resembles the chic upscale high-rises found in Vancouver`s Yaletown or False Creek neighbourhoods.

Read the full article here.

 

[Ally]

Calgary`s House, Condo Sales up as Market rebounds

CALGARY - For the sixth consecutive month, MLS residential sales in Calgary have increased from year-ago levels in both the single-family home and condominium markets--another sign the local real estate market has rebounded from its malaise earlier in the year.

The strength of the market can also be seen in average house prices. Today, single-family homes, for example, are selling in the neighbourhood of $50,000 more than they were in January.

The housing market today is far more positive than it was last October, said Kathleen LaPlante, a realtor with Re/ Max Realty Professionals.

"Buyers are excited. They have choices. Sellers are excited to be getting the offers," said LaPlante.

According to the website of realtor Mike Fotiou, of First Place Realty, month-to-date until Oct. 25, there were 1,015 single-family home sales for an average price of $465,125 and 460 condo sales for an average of $284,511.

In October 2008, the Calgary Real Estate Board reported 820 single-family home sales with an average price of $449,100 and 399 condo sales for an average of $289,148.

Read the full article here.

 

[Ally]

Pipeline Dream in Peril

Ottawa has decided not to proceed with its investment in the $16.2-billion Mackenzie Valley Pipeline, sources said, throwing the future of Canada`s largest construction proposal into doubt.

Sources said that Jim Prentice, the Environment Minister, took a major financial assistance package proposal to a Cabinet committee last week and it was turned down over concerns about the project`s price tag.

When asked whether a decision had been taken not to proceed with the project, Mr. Prentice said: "There has been no decision made."

Mr. Prentice said that he was not prepared to discuss any Cabinet discussions relating to the pipeline. He said that work is carrying on with the project`s fiscal framework and with an environmental review by a quasi-judicial Joint Review Panel, which is due to complete its work by the end of the year.

However, the suggestion that the government may be re-assessing its position comes as news to its potential partners in the project.

Read the full article here.

 

[Ally]

Survey exposes U.S. protectionist fears on Oilsands

CALGARY - Attempts by U.S. politicians to curb imports of oilsands products and "dirty" energy from Canada could face steep challenge under existing WTO rules, the author of a survey into U.S. protectionism said Monday.

According to Helmut Mach, director of the Western Centre for Economic Research at the University of Alberta School of Business, American attempts to restrict imports of higher-carbon fuels such as oilsands output could be illegal under international trade rules because it would discriminate against how a particular product -- in this case, oil--is manufactured.

In that sense, climate bills before the U.S. Senate and Congress could be construed as protectionist measures, Mach said in an interview.

"Normally under international trade rules, how a product is produced is irrelevant," he said. "PPM`s (process and production methods) are not supposed to be a determining factor in purchasing decisions. It has the potential to become a very controversial and complicated factor in the climate change debate."

Mach made the statements after the U of A and the Canada West Foundation released the results of a survey that show protectionist fears in Western Canada are on the rise.

Read the full article here.

 

[Ally]

Alberta`s EI Rolls get Shorter

First, the good news. The number of Albertans receiving employment insurance dipped by 4.4 per cent in July, according to Statistics Canada figures released Monday.

Regular EI beneficiaries in the province fell by 2,700 to 59,500-- the first reversal of Alberta`s torrid growth in EI recipients since last fall. From October to June, the number had risen each month by an average of 5,500 per month.

The bad news is, observers believe some people have dropped off of the EI rolls not because they have found work, but because they have exhausted their benefits.

"Currently, unemployed workers in Alberta are eligible for a maximum of just over 11 months of benefits --which is very close to the length of time that the number of recipients has been rising in the province," said ATB Financial senior economist Todd Hirsch.

"Given the fact that Alberta`s economy continued to shed jobs in July (3,700), the drop in the number of EI recipients appears to be driven more by the depletion of benefits rather than a rebound in the jobs market."

Read the full article here.

 

[Ally]

Stelmach dismisses call for increasing emissions Levy

EDMONTON — Premier Ed Stelmach says he will reject any climate change plan that transfers more money out of Alberta, and quickly dismissed a report that suggests Canada`s climate change goals can only be met by shifting wealth out of the West.

"There won`t be another wealth transfer to Ottawa under my watch, I can tell you," Stelmach said, the day after a new report suggested greenhouse gas targets can only be reached by placing a significantly higher price on carbon emissions.

The report by the Pembina Institute and the David Suzuki Foundation says Alberta could pay up to $5 billion more than it gets back, according to one estimate.

Instead of a 3.7-per-cent annual rate of gross domestic product growth to 2020 under the federal targets, the province would see GDP grow by 3.3 per cent under policies mandating carbon taxes and cap-and-trade markets, the report says.

The report, commissioned by the TD Bank, suggests the federal government would collect $46 billion or more through taxes or by capping emissions.

Read the full article here.

 

[Ally]

Oil-and-Gas to rebound, but Job return will be slow: Mullen Group

CALGARY - The oil and gas services industry of Western Canada hit bottom in the second quarter and is now making its slow way back, the chairman and CEO of transport and oilfield services company Mullen Group declared Thursday.

But the rehiring of 1,100 Mullen employees and contractors--some 20 per cent of its staff--whose jobs disappeared in the past 12 months will not occur until "ridiculously stupid" pricing by competitors is halted, said Murray Mullen.

"We have, in my opinion, seen the bottom. It is tough, at times it`s ugly. It`s particularly difficult on our people. But we are survivors of what can only be classified in many cases as an undisciplined market," Mullen said in a conference call with analysts.

He said his firm, which he admits has lost market share because of its refusal to cut prices below costs, will reinvest through acquisitions and organic growth as customers ramp up spending during the winter drilling season, likely led by Saskatchewan.

"With our business units generally rightsized to where this business cycle is, we can now start to think about where we can deploy our over $200 million worth of cash we currently have on hand," said Mullen.

Read the full article here.

 

[Ally]

Alberta Realtors want Drug House Guidelines

EDMONTON — Alberta`s realtors are calling on the provincial government to adopt guidelines for cleaning up houses used for marijuana grow ops and meth labs.

The Alberta Real Estate Association released a report Thursday by indoor air quality consultant Karen Rollins and University of Calgary architecture professor Tang Lee. The group commissioned the pair to develop a set of standards.

Bill Fowler, director of industry and government relations for the real estate association, said there are currently no standards in place for air quality when drug houses return to the market for unsuspecting home buyers to purchase.

"When drug operations are busted, any issues with the plumbing, heating or electrical or the building structure all can be rectified because there are code requirements in place," Fowler said.

"The big unknown is mould, air quality and air remediation. There are no accepted standards across the province, and our members are concerned about that."

Read the full article here.