Home Month and Year March 2017 Building Up

Building Up

Edmonton’s construction and renovation sector looks to regain momentum.

A custom build by Celico Builders Inc. Photo courtesy of Celico Builders Inc.

Last year, 2016, was tough for a lot of industries as the price drop of oil and gas spread out and affected all of Alberta. While the ICE District and a few other large projects in the city help to keep Edmonton growing, large and small builders across the city are looking forward to a more robust 2017.

James Mabey, chair of REALTORS® Association of Edmonton, weighs in on the year ahead.

“On the residential side, we are expecting a slow start to 2017 with a stronger performance in the latter half of the year,” says Mabey, noting that “2016 turned out to be a stable year, and we aren’t predicting anything drastic for 2017. The inventory level and composition will continue to be the driver in the market. We will still continue to see certain pockets of the market flourish, such as single family homes between $300,000 and $400,000. We will also see a dip in prices in those pockets with the bulk of the inventory mix and lower sales, such as condominiums.”

Mabey has good news for commercial builders.

“As for the commercial sector, we are seeing a lot of smaller commercial developments within new residential areas popping up. Neighbourhoods such as Windermere and Edgemont have seen a lot of commercial growth as a result of residential development. As far as office space, we are seeing a lot of businesses move into the newer builds, but often opting to take offices with less square footage. While the newer office spaces are filling, particularly downtown, some of the older buildings are half vacant. Commercial manufacturing is still struggling as a direct result of the downturn in the energy sector. Multifamily vacancy will likely soften rental rates, with location playing a bigger role now more than ever.

“ICE District continues to be a promising area of development with mid- to high-end office towers and restaurants under development. We are [also] seeing a lot of focus on revitalization of heritage areas within the city. Improvement to transportation corridors has made commuting easier for those in outlying areas. Newer neighbourhoods continue to lead in sales as well as listings, and we expect to continue to see a lot of activity in those areas in 2017.”

When asked how Canada’s new mortgage rules would affect the construction and renovation industry, Mabey commented, “It is still early to see how the new mortgage rules will affect the market. They were designed to temper inflated markets like Vancouver and Toronto. Because we have seen price stability in the Edmonton region, we are not expecting it to greatly impact our average sale price. That said, there are definitely first-time buyers that may need to rethink the price point they are looking for, or save a bit longer to get into their ideal homes. The new mortgage qualification rules may also mean that duplex/row houses will continue to be popular as an alternative to single family detached homes. Many duplexes and row houses offer the affordability of condos, but the ownership style of a single family. Similarly, people may expand their search area and look outside their ideal neighbourhood to accommodate getting the house they want at a price that their mortgage will allow.”

Mabey notes that it is important to engage the right set of professionals when dealing with real estate in a recovering economy. “REALTORS are professionals who have committed to serving their clients with integrity and competence. A residential REALTOR can give you the market information that buyers and sellers need to make the informed decisions that will help them meet their unique needs. They will interpret what is happening in the local market, identify neighbourhood trends and walk you through the buying and selling process to ensure you meet your housing goals. They have access to the MLS® system and know what is available for sale, what has sold and for how much. A REALTOR is there to provide advice to ensure your real estate transaction is completed competently and professionally.

“Similar to residential, a commercial REALTOR understands the local market. They know about new projects being developed in the area, vacancy rates and how they affect values, rental rates for buildings and what type of property management buildings have. They may also have access to important information, such as the renters in buildings, their rentals rates, lease expiry dates, tenants that may be looking to rent and redevelopment plans. Both commercial and residential Realtors provide skilled and conscientious services, and they advocate on their clients’ behalf to get them the best possible outcomes.”

Daniel Iaccino, project manager of Celico Builders Inc., a custom home building company, weighs in on how the past year has been from a builder’s perspective. “I have seen a significant slowdown in the buying and selling of houses. The downturn or ‘correctional period’ we’ve been experiencing has caused buyers to sit back and wait to see what will happen, not to mention there have been a number of financial changes and new building codes that have made purchasing a home more difficult for potential buyers.”

One thing Edmonton’s builders will continue to contend with, as they have over the past few years, are issues surrounding infills; but as Iaccino points out, positive changes are smoothing that process. “A few things have come into play: for starters, the municipalities have introduced more codes and regulations to help preserve the look and feel of these older neighborhoods. I believe the increase in these specific developments is the pure interest people have in living in older established areas, but they still want the latest and greatest (brand new house). These new codes are helping the people already living in these areas have a say in what’s being built.”

Whether Alberta is in a downturn, on the upswing or holding steady, Iaccino loves building in and around Edmonton and putting the company’s customized work to good use. “[Among other projects,] Celico is rebuilding in a home in Northwest Edmonton. This particular house caught fire back in August and, thankfully, the family made it out. I’ve been working closely with them to rebuild what they’ve lost. The house layout has been completely redesigned to create a comfortable space and add more value to the property than before. This is an example Celico’s experience and willingness to tackle any kind of project.

“One of the biggest reasons I love building in Alberta is the different people I get to meet; from trades to REALTORS, clients and lawyers, they all have a different take on life. The province we live in has a great mix of different cultures, religions and ethnicity, which leads to incredibly unique designs to fit their specific lifestyles.” He goes on to note that by choosing a custom build, property owners get what is right for them. The owners fit the space instead of having to try to fit into someone else’s space and vison. “There isn’t one floor layout that will work for everyone,” he laughs.

“I would have to point out that people are becoming very selective with their choice of builder and type of house,” Iaccino points out about a growing trend in the region. “It needs to fit the bill or there is no point in buying. I encourage everyone to do your research on the builder – not just on the clients, but also on their suppliers and trades. These companies can reveal the truth about the builder and whether they’ll treat you with the respect you deserve.”

A new year is underway, and with it, new and interesting experiences in the construction industry. As always, Edmonton and its builders are up for the challenge.