Issue link: http://read.ca.pwc.com/i/90582
for good connectivity to downtown" is going to intensify. Many interviewees say they will follow: "We will be building more residential rental buildings on high- public-transit locations," and "[We will see] continued urbanization and building near existing transit lines and future transit lines." Whatever way you look at it, "tenants want to walk or be near public transit." Markets that offer both options will succeed. Metro Market Trends Calgary (1). Growth, growth, growth is in Calgary's future, as evidenced by economic fundamentals, commercial real estate volume, and Emerging Trends survey results. An expanding economy is requiring a larger and more highly skilled workforce, and numbers show that this trend will continue. Employment forecasts indicate growth of 2.8 percent next year and 2.9 percent in 2014. This growth, driven mostly by the oil and gas industry, has made it challenging to acquire high-quality real estate in this market. Absorption of prime properties has reached record levels, and rents are continuing to be pushed due to limited supply. "It's harder to bid on local Calgary-area 'A'-quality assets." In 2013, this absorption and lack of space looks to continue, especially within office- type and industrial employment space because job numbers in these areas are expected to increase 3.6 percent and 2.6 percent, respectively. Construction will increase in the housing and non residential arenas, but will be nowhere near pre-crisis levels. Calgary has impressive results and rankings in this year's survey, registering first in investment prospects, first in development prospects, and second in homebuilding prospects. This is not a surprise for many participants, who maintain that "Calgary is heating up" and "Calgary is the best." The city's investment prospect ranking moved from third to first in 2013, receiving the only "good" 74 Emerging Trends in Real Estate® 2013 designation of the nine markets in the survey. High-quality opportunities might be difficult to find in this area, but investors will continue to hunt regardless of price. Calgary development had the largest gain in its rating value, up 1.1 points, moving into first as well. Demand will remain high and development is needed: total construction output will increase only 3.0 percent this year and 4.7 percent next. Calgary could not get the trifecta this year, though, as homebuilding in the market placed second to its northern neighbor, Edmonton. Housing starts should crack 10,000 in 2013, registering a marginal 4.4 percent increase year- over-year. The buy, hold, and sell strategies show a majority of participants recommending a buy in three of the five property sectors. With over 56 percent of respondents recommending purchasing, industrial leads the focus, a 12 percent- age point increase in this market over last year's results. Apartments are a sector to buy as well, according to 55 percent of survey participants. One interviewee disagrees, though, stating "Calgary: not so good for residential sectors. It is a city of homeowners." Retail properties chalk up a buy, too, as retail sales increased close to 10 percent this year, and a 7.0 percent increase is expected next year. Results for office look great for owners, as 45 percent of interviewees recommend a hold for now. The lack of space, climbing rents, and anticipated cap rate compression put landlords in control in Calgary's office environment. Edmonton (2). Only about a three- and-a-half-hour drive from Calgary, Edmonton "is looking great" as well.