By Steffanie Costigan - Lethbridge Herald Local Journalism Initiative Reporter on January 20, 2024.
Investments in the community will add approximately 700 new units including a mixture of retail and multifamily units, according to global commercial real estate firm Avison Young.
“We’re definitely seeing a lot of an uptick in the number of units started this year. They’ll be units that will be started again next year that are already in the planning stages,” noted Doug Mereska, broker and managing director at Avison Young in Lethbridge.
Mereska said the new 700 units are anticipated to be available to the marketplace from 2023 to the end of 2025. He added there will not be many units anticipated to be in North Lethbridge because the demand is more in West Lethbridge.
“Most will be in West Lethbridge, a little bit in South but I would say probably 60 per cent in West Lethbridge of that number, and about 40 per cent in South Lethbridge,” he said.
Mereska said they had under 3,000 rental properties within the city. “When you add 700 in a in a three-year period, that’s pretty significant. Rental specific ones. Which is good.”
He said the government is providing incentives for people to build multi-family units to increase housing.
“It’s cheaper to get money to build multi-family. You don’t need as much cash as a down payment to build multi-family. So I think it’s those three reasons. That’s what’s driving multi-family. And not only our marketplace, but right across Canada and most of the developed countries,” said Mereska.
Mereska said most of the units being built will be in the West Lethbridge Crossings area.
“I would say half of that 700 will be in that Crossing area,” he said.
Due to the increased number of people who will be living in the Crossing area Mereska said it is possible more retail units will be built there, as well.
“We’ve really anticipated to see some significant developments in the retail in the Crossings, as well. I don’t know if we’ll see another grocery store there, but we’ll definitely see some more retail happening in that area,” said Mereska.
Mereska shared the hope that interest rates are plateauing and will likely go down.
“That will mean I think we’ll start to see some more industrial product being built this year. So like building material is starting to go down. What’s driving, I think what’s going to drive it as interest rates are gonna go down,” said Mereska.
In a media release on the company’s website, Mereska stated “investor sentiment plays such an impactful role in property transactions that, by accepting the market’s ‘new normal,’ we will see projects regain momentum in 2024.”
“While high construction costs and increased interest rates have caused a slowdown in our market, we are starting to emerge from a holding period into one of new development,” said Jeremy Roden, Executive Vice President in Avison Young’s Lethbridge office in that release.
“Average base rent rates for industrial and office real estate have increased in line with inflation, while retail real estate is polarized between high asking rents in new builds and moderate asking rents in existing retail space, particularly in the downtown. Although average rental rates in Lethbridge are still slightly below other comparable markets, Avison Young expects to see steady rate growth in the future, with significantly higher asking rents for new builds,” says the company.
“Office vacancy is declining, largely due to non-traditional tenants who can utilize the partial office build-out,” adds Avison Young which notes that there has been heightened activity in land sales through the end of last year.
“These investment developments are well positioned for future growth where they may transact to owner-users or be retained as built-to-suit revenue-generating properties with long-term or national tenants,” said Roden.