Andy England, VP of Commercial lending at ATB Financial had comforting insights for the commercial lending scene in Alberta.  Comforts such as:

• Some compression in spreads (250 to 300 bps range) and the return of some 10-year money;
• Lending values making some movement to 70% for smaller transactions;
• A return to a more traditional 70 to 75% lending value once cap rates and the economy stabilize;
• With the exception of Calgary/Edmonton office markets, other subsectors, while seeing some erosion, are generally considered to be stable overall with most experiencing vacancies under 6% and no further deterioration is expected;
• ATB Financial remains bullish on commercial real estate and continues to believe there are still good opportunities to grow a quality book in this market.

All of these insights point to less headache for Edmonton’s commercial buyers – there have been so many hoops to jump through for lenders this year, costing EVERYONE time and money.

Read the entire article here.

The Globe & Mail spent some time with Avison Young, CB Richard Ellis, Cushman & Wakefield, and Colliers and found a few common viewpoints: Canadian commercial real estate is facing 12- 18 months of recovery to normal.  They also expect it to be a fast paced market when things do kick back in to high gear.

I personally see Edmonton benefiting sooner than later, as the meltdown has not had the same devastating effect here as it did in other areas of the country.  I can state with certainty that the number of leads we are fielding have increased in the last couple weeks, but this is fairly normal for this time of year as businesses are trying to get established in new spaces prior to the snow flying.

Read the full article here.

I am compelled to nominate Cafe Haven for the 2009 Sherwood Park & District Chamber of Commerce, New Small Business Award. In fact, it would not be entirely overstatement to say that Cafe Haven, owned and operated by Park residents Michael & Julie Harvey, is one of the reasons we have chosen to make Sherwood Park home.

My family first moved to Sherwood Park in December of 2007.  It was meant to be a short, house-sitting assignment while we looked for a home to purchase in Edmonton. Until that point, our brief visits to Sherwood Park to visit family had given us the impression that it was a normal suburb comprised of big-box chains: soul-less and lacking in the personality department (nice big trees in the older neighborhoods, however).  We intended to search for a house in Edmonton, looking for a community with more colorful character.

Avid coffee drinkers, my wife and I loved the hunt for quality independent cafe’s wherever we travelled. It wasn’t until February of 2008 that we took a risk, pulled off of Broadmoor and crossed the threshold of our new favorite Cafe. The traditional strip mall exterior concealed what awaited us inside; a warm, worldly environment with eclectic furniture, exotic decorations, board games, and happily, espresso. And not the kind that comes easily and without talent.

Almost two years later we are proud residents of Sherwood Park, and we have since discovered many more independent businesses thriving under the leadership of courageous local entrepreneurs.  Among these, Cafe Haven still stands out and there are three core reasons why it deserves to hold the title of 2009’s best New Small Business. Each of these principled commitments are not easily kept; they are of the kind that are made while risking a hit to the bottom line.   Cafe Haven has made these commitments regardless, choosing to create a business governed by benevolent principles as opposed to the almighty bottom line.

1. Dedication to Superior Product
A cafe of this variety has two products; Food & Beverage, and Experience. There are times I have entered the Cafe to be excitedly greeted by Michael with bags under his eyes.  He’s been “dialing in” his coffee brewer a good chunk of the night, and can’t wait for some feedback on the new brew. He shows me his charts, where he has painstakingly adjusted the variables in tiny increments – grind, water temperature, brew time, etc. – until arriving at the taste he’s searching for.

There are many reason why Cafe Haven offers the best coffee in the Park. They have chosen to source their beans from local roaster Transcend, who’s approach to roasting involves small batches carefully monitored and assessed. Your coffee is not ground until you’ve ordered it, they never hold a grind for longer than 5 minutes due to the rapid oxidization of coffee. The coffee is never more than one week off the roast and is placed in vacuum one-way valve bags ensuring that your coffee has the minimum amount of contact with the air – the killer of fresh coffee. The twice former South Australian Barista Champion and current Prairies Barista Champion, trains the staff to follow a meticulous process for making espresso and adhere to strict standards that ensure every drink is of the highest quality. They warm your cup. They won’t allow you to add Pina Colada syrup to your latte (the organic syrups are for Italian Soda’s, not ruining your coffee with).

The menu does not feature items you can find anywhere else within driving distance. It has been inspired by Michael & Julie’s travels around the globe, infused with Julie’s dedication to out-of-the-box experimentation, and crafted from scratch.  Fresh, with your health in mind. Where else can you find a pumpkin, pesto and feta cheese ciabatta with arugula?

The sought after Cafe “Experience” is not something that can be purchased out of a box.  It’s an intangible combination of lighting, music, colors, temperature, smells, furniture, and tastes.  Couches to slouch on and read a book, nooks for private conversations, or tables to set up a laptop, connect to the Wi-Fi and get to work.  A hard-to-resist retail display stocked with the even harder to find coffee-geek gear essential to making high quality beverages at home. Quirky baristas who remember you don’t need room for cream in your Americano.  [Great staff who's personality is allowed to shine does not happen with a thick rule book and micromanagement. The positive work environment that has been created for their staff has been founded on the risky values of trust and responsibility.] Cafe Haven has it, and if they could bottle it up …

2. Dedication to the Local Economy
The coffees, food ingredients, beers, wines & desserts have not been purchased from the cheapest vendors.  Wherever feasible, they have made a commitment to supporting the local economy and are sourced from nearby farmers, grocers, brewers, roasters, and bakers.  Not only does this reduce the environmental footprint due to reduced shipping and transportation, but helps ensure the livelihood of the independent entrepreneurs who are contributing to the charm and character of the area.  Items, such as coffee beans which are not reputed to grow so well here, are ethically sourced with concern for our international neighbors: as fair or fairer than Fair Trade.

The Cafe has also proven itself to be an ideal venue for local artists and musicians to share their talents with the community; the walls proudly promoting incredible local talent.  In addition, their well-attended music nights have raised thousands of dollars for worthy charities and provides an intimate environment for friends and family to enjoy great live acts.

3. Dedication to Environmental Sustainability
Aside from significantly reducing their footprint by shopping local, Cafe Haven has a religious recycling system that recycles all plastics, paper, tins and glass; and composts between spring and fall. They provide incentives for customers to bring their own to-go mugs, and in the unfortunate event you have forgotten your mug they will provide you with their own compost-able ecotainers – sans judgement. Greener, safe alternatives to harsh cleaning chemicals are sought out and used where possible, and they have a long-term goal of being 100% green-powered.

My only complaint is that I have been spoilt. Forever ruined for ordinary coffee and ordinary cafe’s. These commitments I have highlighted here are likely only the tip of the iceberg – what has become visible to me as a loyal customer.  No doubt there are many other activities behind the scenes that lend further support, however these activities I bring to your attention, alone, make Cafe Haven the primary choice for the 2009 Sherwood Park & District Chamber of Commerce New Small Business Award.

View a photo gallery of the Cafe here, and visit their blog here.

There is a good chance your lender (or the Purchaser’s if you are the Vendor) will only accept Environmental Site Assessments (ESA) from an environmental consultant that has previously been approved by them.  Not all environmental reports will meet your bank’s criteria. A criterion of one bank, for example, is $1M in liability coverage – whereas some reports are only covered for the amount of the fee charged for the report (typically $3000-5,000).

Save yourself a headache, and weeks of time in the event of a bank-rejected ESA, by stating in the purchase contract that the ESA MUST be performed by a party approved by the purchaser’s lender.

When it comes to addressing ESA’s in the contract include:

• The date of the report. (Some banks again, require them to be less than 1 year old, yours may be different yet.)
• Who is to bear the expense. (Even if it has already been paid for by the Vendor, don’t make any assumptions here. I have seen a Vendor send a bill to the Purchaser for the ESA after the deal was done!)
• When the report must be completed by. (Give yourself some breathing room before conditions come off, give your lender some time to review and approve the report.)
• Who is to perform the ESA. (Consult with your bank, and follow up with whomever is arranging the report to ensure the engineer is on the approved list.)

Colliers has just released its Q2 Industrial Report, and the biggest news is a slight increase in the vacancy rate, from 2.99% to 3.8%, as well as very little sales and leasing activity.

• The vacancy rate 18 months ago was only 1.51%, rose to 3.17% at the end of 2008, dipped slightly in Q1 2009, and has crept up again to the new high of 3.8%.
• Interesting to note is that only 39 acres of industrial land has sold so far in 2009 … numbers like that haven’t been seen since the mid-80’s.
• Edmonton’s industrial inventory has not seen selection like this in 6-7 years.
• Zero new construction in Q2, meaning the increase in vacancy is entirely from existing properties.

The full report, which expects continued downward pressure on industrial lease rates and sale prices can be downloaded here: Edmonton Industrial Second Quarter 2009 Report by Colliers.

There are two new tools brought into play by Alberta Environment to simplify, and reduce your risk in purchasing industrial property in Alberta.

1. Easy View of Environmental Site Assessment (ESA) history on a property. Using Alberta Registries Land Titles SPIN2 technology, the Environmental Site Assessment Repository allows you to search for a site by legal land description, municipal address or map. If information on a site is available, users can download, email and print relevant information and documents.

The Environmental Site Assessment Repository is an online, searchable database that provides scientific and technical information about assessed sites throughout Alberta.

Environmental site assessments determine the quality of soil and groundwater of a site, particularly at retail gas stations and other commercial and industrial sites. A site assessment does not necessarily mean a site is, or ever was, contaminated.

Give it a try here: http://ENVIRONMENT.ALBERTA.CA/2948.HTML

2. Peace of Mind. Alberta Environment will now provide closure of regulatory liability against changing remediation guidelines through its new, Remediation Certificate Program. Remediation certification is a voluntary process that provides assurance that additional remediation is not required if remediation guidelines are amended or updated.

Remediation certificates will provide lending institutions, investors, and the public assurance that substance releases have been remediated to the satisfaction of Alberta Environment for a defined land use.

Initially, remediation certificates will be available for petroleum storage tank (PST), such as retail gas station sites. In the future, the program will be expanded to include upstream oil and gas sites.

Site owners who wish to receive a remediation certificate must submit a remediation certificate application form and $1,000 application fee.

To support the program, Alberta Environment developed A Guide to Remediation Certificates for Petroleum Storage Tank Sites, Remediation Certificate Application Form, Third Party Risk Management Plan Agreement form, and a Fact Sheet. These documents are available at http://environment.alberta.ca/3498.html

Questions or comments about the program may be directed to:
land.management (at) gov.ab.ca

Alberta Venture's Best Communities Online

Alberta Venture has put together an accessible database of Alberta communities slanted for the business folks considering, “location, location, location.”

A great resource for real estate investors performing their due-diligence, the info is laid out well, and in a glance you can wrap your head around the key information.

The #1 recommended community to locate your business is the Edmonton International Region – being the area around the airport (Leduc & Nisku are the hubs). The rest of the top ten includes Edmonton, Strathcona County, Camrose, Airdrie, Calgary, Lethbridge, Lloydminster, Red Deer and Strathmore.

One item to note, is that the pricing for serviced industrial land is consistently on the low side. For example, serviced industrial land in Strathcona County for $300,000 per acre? $500,000 would be a safer “average”.

Real estate investors take note: this type of information shows trends for yesterday & today, but does not forecast tomorrow. A decision by city council, or the unexpected fall of a commodity price can quickly change the tides for a community. If you are not an informed citizen of the community you are investing in, there is no substitute for an unbiased, on-the-ground local expert to give you an inside scoop, and assist in taking a calculated risk to capture the biggest upside tomorrow.

Well done, Alberta Venture, a useful tool which I think many will utilize.

http://www.albertaventure.com/?p=3293

For a link to the 12 questions you need to ask about where your investment property is located, also see this post.

According to the recent census, most of Edmonton’s 30,000 new residents are between 25 and 34 years old. Although times may be rougher around the world, this is further evidence that quality of life is “less” rough here in Edmonton, Alberta. 30,000 more folks buying, groceries, gas, and iphones; paying rent, mortgages and reducing an already low vacancy rate. More importantly, gauging by the age bracket, these are producers and supply our workforce with additional human resources.  This is also an age group that does not use as many city services as others, putting less strain on City infrastructure.

Population jump surprises city Edmonton Journal

Folks continue to flock here Edmonton Sun

Counter-Spin, breaking news:

Due to continued layoffs in the area, Shell may be able to shift away from their foreign worker program and use all local workers.  Don’t get too excited though, they anticipate there will still be times they need to rely on out-of-province workers.

With the recession loosening the labour market considerably, Harradence said Shell believes it can staff the entire project with local workers.  “We’re moving definitely away from our foreign worker program,” she added, noting the company is also moving away from its out-of-province workers program but are watching closely because there will be times when they need those workers . . . She said the loosening of the labour market will represent “huge savings” for the company.

Seems we need just a few more layoffs for the 5,000 worker Scotford Upgrader project to be able to rely on local labour.  Read the entire article here. 

Disclaimer – please forgive the provocative tongue-in-cheek tone, it is an unfortunate situation for those who have experience an unwanted layoff, and I sincerely hope the trend does not continue.  This is not meant to convey any anti-foreign-worker sentiment, either.

and on the way down it decreases every day.

These are the words of wisdom from Ozzie Jurock, a long-time real estate investor as he shares his take on how to make a move in the current down cycle.  This concept is especially hard to wrap your head around when you are watching price drops happen around you, you are reaching for your wallet to commit, and your neighbor is shaking his head at why you are “overpaying” for a property.

Real estate always has, always will, be cyclical in nature, and smart investors make their decision based on fundamentals, not the emotion of the neighbors, their city, or the media.  Here are a couple more bits from Ozzie, then I suggest you read the full article entitled, “Shop Wisely and Make Offers” here. 

Buy “use” to you or your family — buy your own business space … and don’t worry. The best deals come in down markets.

For 40 years, prices soared because we lived through the most unreported inflation of all times, because we printed more money than ever.  Today, this is even more the case. All that extra cash created out of thin air will continue to compete with the money you and I make and drive hard asset prices eventually higher again, after we clear out the messes and the excesses, just like we did in 1992 (or 2001, 1998, 1987, 1981, 1974).

From an investor’s perspective, we like cash-flowing properties anywhere — where there is a good employment base, low vacancies, capital investment and a good price-to-rent ratio.  We see that developing in Edmonton and many small towns throughout Alberta.

Another piece of Ozzie’s advice is to “overcome your fears and write offers.”  I can’t stress how important this is in the current market conditions.  So many vendor’s I have spoken with know they are priced high, but stress verbally they are negotiable.  They aren’t negotiable with a tire-kicker making a verbal offer – they need so see a signature and a deposit.  With more available product now is the time to shop hard by writing offers on multiple properties – leverage your opportunities against each other.  One thing you need to understand about most vendors is that they don’t have a store full of product to move off the shelves – often they only have one product.  Can you blame them for pricing in such a way “just in case” they can pull it off?  

Many vendors are on the verge of dropping their price, and all of a sudden your low-ball offer isn’t so low, its right in line with their new price.  Do you want to have the first crack at a lower price?  Or wait until the new more attractive price is advertised in the newspaper for all your competitors to see and jump on?  An offer with a signature, deposit, a well-written cover letter featuring a price backed with new comparables will take you places you never expected.

I have to throw in one more Ozzie quote – forgive me for the blatant self-promotion but sometimes its just too easy:

The key is that you shop wisely, get a professional realtor, research, overcome your fear and make offers.