Two new-construction Edmonton apartment properties, Raymond Block and 121 West, are on the sale block as the city’s multifamily market deals with a sagging economy and COVID-19.
“There has been a fairly steady stream of new construction in Edmonton, so there’s been an addition of supply, and the economy has been in a really rough spot since before COVID,” said Paul Chaput, senior vice-president of Institutional Property Advisors (IPA), the listing agent for the two properties, in an interview with RENX.
Chaput said the Edmonton multifamily market has been resilient during this turbulent time, with vacancy rates only now starting to increase from the pre-pandemic rate of four to five per cent. Rent collections, however, have held steady.
Among the new Edmonton apartment buildings in the leasing stage, or about to enter it, are:
* Regency Developments’ 121 West, which was originally intended to be a condominium;
* Pangman Development Corporation’s Augustana. 240 units ranging in size from 487 to 1,335 square feet in a tower above a retail base downtown at 10620 99 Ave. NW;
* and Cidex’s 24-storey, 199-unit The Hat at Five Corners. This building also has retail in the podium, at 10215 95 St. NW in the Quarters District near Jasper Avenue, just east of downtown.
Rent incentives likely to be offered
“With that amount of product coming on at a relatively similar time, landlords are going to duke it out a bit and will probably offer some incentives,” said Chaput. “Incentives have been fairly prevalent in our market over the last few years.”
“We were in a (similar) situation three or four years ago when The Mayfair, The Oliver, Edgewater and The Hendrix were all completed within a few months of each other,“ IPA senior VP Bradyn Arth told RENX.
Free-rent incentives were offered to help lease those buildings, and Arth said that helped to eventually stabilize and fill them.
Some developers of recently built Edmonton apartments aren’t known for holding them long-term, so Chaput believes more buildings could be put up for sale once they’re at least 75 per cent leased, which could take a year or two.
While potential purchasers are looking for deals, vendors are finding it difficult to justify price reductions, he added.
“We’ve been in a bit of a stalemate. We’re optimistic that, going through Q3 and into Q4, we’re going to see some product trading in Edmonton and Calgary that’s going to indicate where pricing is heading.”
Wexford Developments’ Raymond Block includes 95 fully occupied apartment suites averaging 720 square feet and ranging from studios to two-bedroom units.
It also includes 24,996 square feet of second-floor office space which is 90 per cent leased, and 21,218 square feet of fully leased main-floor retail space.
The building on the 0.69-acre site at 8155 105 St. NW is the first LEED Platinum-certified, mixed-use, mid-rise asset in Canada. It achieved occupancy in April 2019.
The concrete construction property has 29 residential and 33 commercial underground parking stalls, a bicycle storage locker, fitness centre, an indoor/outdoor patio and lounge.
The retail tenants are 7-Eleven, Blaze Pizza, CB Resources Corp., Five Guys, Lan Noodle House, Miniso, Remedy Café, Tokyo Smoke and ZGM.
Raymond Block is located between the Queen Alexandra and Strathcona neighbourhoods and is within walking distance of shopping, arts and entertainment facilities along Whyte Avenue. The University of Alberta and University of Alberta Hospital are also nearby.
Arth said it was always Wexford’s intention to sell Raymond Block, but the timing was a question mark. It was planned to go to market early this year, but plans changed and things were put on hold due to the onset of COVID-19.
Raymond Block is listed for $70 million and Arth would like to see it sell by the fourth quarter. He said the building appeals to professional tenants, has a limited turnover and hasn’t had any rent deferrals.
Arth expects institutional investors with a commercial portfolio to be among those interested in purchasing Raymond Block.
“There are going to be some high-net-worth individuals, but also some groups that are a lot more comfortable with being a retail and office landlord. It’s not really well-suited for a pure-play res group.”
The 396-unit 121 West is located on a 1.48-acre site at 10505 122 St. NW, parallel to the Brewery District and within walking distance of retail, dining and entertainment options.
It’s comprised of one nine-storey building and one 10-storey building, both constructed of concrete. It has 24 studios, 234 one-bedroom units and 138 two-bedroom units. The average size is 736 square feet.
There are 256 underground parking stalls and 102 bicycle stalls.