Every time there is an economic downturn, minds turn to diversification, says Chief Operating Officer of Strategic Group, Randy Ferguson.
“We live in an economy where 31 per cent of our GDP is driven by one sector. But what that really means is 69 per cent is not driven by one industry,” he says. “The strengths of other sectors like hospitality, education, health, and sciences and technology is increasing in multiples. There are tremendous opportunities to build on those markets and to create new jobs that will occupy those spaces.”
A downturn in the energy sector caused by the sinking price of oil and gas has led to an increase of available spaces on the market, Ferguson says. It has significantly eliminated the uptake of tower space in Calgary – specifically, double A and triple A towers 30,000 to 40,000 square foot floor plates, largely configured on an open floor basis that has proven difficult to subdivide for multiple tenants.
However, the economic uncertainty has led to significant growth in the multi-family rental residential asset class in Alberta, Ferguson says .
“The market here has been traditionally under serviced because there was always a propensity to buy – now there is more propensity to rent.
“We’ve also noticed how much younger these cities are becoming. The average age in Calgary is 34. We’ve got a suitable millennial workforce moving into the cities and this is a cohort that wants independence, mobility, and prefers renting quality housing.”
“What I think we need to do this time is to take advantage of the ready and growing, young, educated workforce. We have all the raw material available to diversify our economy. This economic downturn is a golden opportunity to come together with business and government to create new jobs – there’s nothing in our way except ourselves.”
Canadian Real Estate Forum Fall Issue 2016