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Calgary’s Official Bird the Tower Crane Returns – Highly Cyclical Migration Pattern March 10, 2008

Posted by DustinRJay in Calgary real estate.
Tags: , , , ,

The amount of commercial real estate being developed in Calgary has not been witnessed since the 70’s and early 80’s.  There are currently several mega-projects being built including the Bow (236.0 m), Eighth Avenue Place I (213.2 m), Centennial Place I (176.0 m), Jamieson Place (170.0 m), and Centennial Place II (110.0 m).  These commercial buildings will greatly increase the amount of square footage of commercial real estate available downtown.

The Bow, at a staggering 1.7 million square feet, will consolidate EnCana’s staff from three buildings into one.  Eighth Avenue Place (Penny Lane) currently has no anchor tenant and is being built on speculation.  Commercial real estate lease agents are currently having a hard time getting anyone to sign a 1+ year contract due to the volumes of commercial real estate being developed. 

It is possible that there is going to be an oversupply of commercial real estate in Calgary, and after this wave of commercial real estate is finished, there will likely be an extended lull in construction.

The following graph compares aggregate height of commercial buildings constructed over 100 metres by completion year against residential real estate prices:

Calgary’s Official Bird the Tower Crane Returns

 A timeline of images of Calgary skylines shows that there is little change in commercial development from 1985 to 2004.

Some of the conclusions I came up with after doing this analysis are fairly intuitive, but help to provide insight into timing.  These are:

  • Residential prices boom during periods of commercial construction booms.
  • Current commercial construction levels have not been this high since the 70’s and early 80’s.
  • The residential real estate bust in Calgary occurred during a time when there was record levels of large scale commercial real estate construction being completed.
  • When the 1980’s commercial construction boom ended, house values fell dramatically.
  • Overdevelopment of commercial real estate in the 80’s left little constructed for the following 20 years.
  • Commercial real estate construction is incredibly cyclical.
  • For this construction boom, there is a much greater share of construction projects over 100 metres that are residential vs. commercial.

As an aside, I encourage anyone who is looking at the Canadian real estate market to look past the sound bites.   Due to their vested interest, it is difficult to find a banker, real estate agent, CMHC analyst, developer, newspaper, or radio program which has the chance to be frank and analytical.


1. Port Orange Property - March 11, 2008

If they build it will they come. Many commercial projects think they will and have built. The US has had the same situation and so far the commercial building is do okay slow but okay. Our residential market is different a buyers market due to recent foreclosures.

2. Carioca Canuck - March 11, 2008


Great article.

I loved the last part……..”Due to their vested interest, it is difficult to find a banker, real estate agent, CMHC analyst, developer, newspaper, or radio program which has the chance to be frank and analytical.”

Read Mario “the shill” Toneguzzi’s article in today’s Calgaary Herald.


Condo sales are in the toilet, down 40% month over month for the last 3 months and this month will be even worse. He is raving about how condo construction is booming. Kinda deliberately gives the wrong impression to someone……..doesn’t it ?

3. Rational Exhuberance. - March 11, 2008


I like your posting because it shows the cyclicality of the business. I think the biggest mistake people make in investing is believing that the trend from the past few years will remain the same forever. What we know is that at some point the trend will reverse, and then go in the opposite direction for a few years.

Most investors are bad at understanding this, so typically buy high, trying to ride momentum. Those few who have forsight and patience, can wait until prices are weak to buy, and then sell into strength. This is very difficult to do, but worthwhile nonetheless.

4. Noemo - March 18, 2008

Commercial construction generally follows residential construction by a year or two. Usually an increased demand for housing is started by in-migration due to jobs being available. As communities are built out the demand is then for hospitals, schools, shopping malls etc.
Also since commercial projects have longer planning, financing, leasing and construction timetables they tend to lag the residential cycles. High rise office projects are normally only built when vacancy rates get low enough that lease rates start to climb to the point where it makes economic sense to go forward with a project. By the time these large projects get out of the ground a lot of changes can happen in the marketplace.

It is a far more complex than most people realize and in a lot ways it is a gamble whenever a large project is given the green light.

5. Noemo - March 18, 2008

One thing to add to that is that everything takes longer to accomplish in a boom economy. Drawings take longer to complete, the development permit process can drag on for years , building permit approvals take longer and construction times can double. No simple feat to get from idea to hole in the ground. Property Developer is not a job for the timid and it can either be hugely profitable or, with one wrong move, a bankruptcy.

6. Aaron - March 30, 2008

Due to their vested interest, it is difficult to find a banker, real estate agent, CMHC analyst, developer, newspaper, or radio program which has the chance to be frank and analytical.

How true.

7. Kimberly Kimball - June 26, 2014

Where you’re headquartered says a lot about how your business perceives itself. Are you making the right statement about your company? Check out this ‘link loaded’ article for the top 10 considerations.


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