It’s easy to see that Calgary’s development sector remains comparatively active in response to the usual key drivers (like jobs growth, net immigration, energy demand, low taxes and low interest rates), however previous boom cycles have taught us about the cost of prosperity.
Rising material and labour costs become a concern in periods like these, not to mention increased speculative activity around real estate generally – both developed and undeveloped.
Although speculation can lead to a more frenetic pace of development – which tends to end badly – a number of significant external rumblings should help keep activity (and costs) in check. Energy export constraints, local and provincial budget deficits and continued unease about global financial stability – to name a few – will influence development plans in the medium term and should help temper expectations which might otherwise lead to an unsustainable ‘boom’.
Our outlook for Calgary’s development sector remains positive, however vigilance is warranted to avoid projects or investments whose feasability is heavily reliant on continued improvement over current market characteristics. The market is good, but should not be expected to improve simply as an offset to higher costs.
We are continuing to evaluate development project investments in partnership with established Calgary area partners and look forward to sharing further information with you as opportunities warrant.