Over the last few weeks, Alberta residents have been wondering what happens next.
After homes were destroyed and a massive amount of commercial properties burned to the ground, it’s apparent the silver lining is people from around the world, Canadians and Albertans have and will continue to come together to rebuild homes and slowly put back together a plan that will begin to reconcile what was lost.
It’s been reported insurance companies will be doling out $5-9 billion – one of the most costly disasters in Canadian history.
Things to keep in mind
If you are a small business or property owner, here are a few things to keep in mind when looking ahead at effective risk management:
Insurance coverage: As a business owner, it is likely several insurance loss applications will need to be filed. Property insurance will provide money for rebuilding or repairing physical damage. However, the income lost while rebuilding is typically covered by business interruption insurance which results in a separate application and proof of loss based on your business performance history.
Expect multiple business disruptions: If you are a small business owner, hopefully you have insurance to protect against interruptions triggered by such a disaster, including income lost. Keep in mind other businesses such as your suppliers may be impacted, too, and it will take some time until business communities and partners are up and running again.
Communicate with your property owner or tenant. No matter what side of the coin you are on, it’s important the property owner and tenant (small business, or other) keep in touch over this process. It’s imperative to know each other’s plans moving forward and if anything has changed given the circumstances.
What’s happening elsewhere in the province?
There is inevitably a ripple effect when a crisis of this scale occurs. Here are some current insights on real estate trends in other parts of Alberta:
Office space: We know supply and demand will drive any market and that also applies to real estate. Before the fires, as business in the oil patch slowed over the past two years, it has resulted in staff reductions and lower demand for office space. These impacts are acutely felt in the Calgary market, while the impact is somewhat less extreme in Edmonton where the markets are more diverse.
However, with Edmonton in close proximity to Fort McMurray, demand for temporary office space could increase with the need for insurance companies to process and assess claims, and as the logistical side of rebuilding gets underway.
Retail holding steady
Retail occupancy: Retail prices are holding steady and will likely continue to do so for the remainder of the year, particularly for neighbourhood centres catering to existing households. While investors may be temporarily cautious, those who know the markets and have the capital are keen to buy and still see rising value for retail investments in the right market.
Major new expansion will likely be delayed as the economy rebuilds, but there is still opportunity for brands to expand by backfilling mature existing markets.
Apartment complexes: It could be an ideal time to enter this sector. Prices for investors are reasonable in the core Alberta cities and other Alberta urban areas. Demand for short-term rental housing is likely to rise as the population shifts to rental accommodation versus purchasing outright as they wait to see how the economy stabilizes.
While the Alberta fires certainly throw uncertainty into some best-laid economic and local job growth plans, the flip slide is it will stimulate the demand for builders, suppliers, construction workers and so on. When the economy is doing relatively well, real estate prices tend to follow.