Investing in Alberta Real Estate | Edmonton

Invest in Edmonton Real Estate

Avenue Living has always believed that the Prairies is a region filled with promise. We were founded here and have strategically invested in Alberta since 2006, and today we own and operate approximately 3,500 multi-family units in Edmonton alone. While others may have looked eastward, or to the coasts, we have kept our eyes firmly on western Canada.

“We’re focused on continuing to build our multi-family residential portfolio in the Prairies,” says Gabe Millard, SVP Capital Markets — Equity & Research. “There’s plenty of opportunity to deliver safe, affordable, comfortable housing to our target demographic, workforce housing residents.” Amid rising interest rates and inflation, Alberta attracts people from other provinces as well as new arrivals to Canada due to its affordable cost of living and strong employment prospects. 

Promising Market Demographics 

Alberta has experienced population growth in the past year, especially inter-provincial migration — in 2023, it led the country, with a rate significantly higher than other provinces. Edmonton’s population is expected to grow from 1.25 million to 1.86 million by 2033, and the city is expected to surpass the two-million mark by 2041. In 2023 alone, the province grew by 3.5%

Many industry experts anticipate the demand for multi-family residential rentals to increase as the population ages, a trend that holds true in many municipalities. The demand for apartment-style housing tends to be high among younger populations just forming households, then rises again as people grow older and seek alternatives to single-family homes. 

Alberta is known for its affordability, and Edmonton has a reputation as an affordable “big city.” In 2022, a benchmarking study ranked Edmonton among the most affordable in the country.

Industry and Employment 

In addition to being an affordable city, Edmonton boasts a high median renter income, 42% higher than the national median thanks to strong employment opportunities. While the province is renowned for its energy sector, an industry that has driven employment for decades, Edmontonians also work in a variety of other industries. The city has a strong technology sector, fueled by its reputation as a leading research and education centre — the University of Alberta is home to the National Institute for Nanotechnology and the Alberta Machine Intelligence Institute. The city is also home to several regional offices of major banks. 

Edmonton’s largest employer is Alberta Health Services (AHS); the government of Alberta is second. The University of Alberta is also a top employer, and one of the country’s leading research institutions. In total, there are six post-secondary institutions in the city, which provide services to 180,000 full and part-time students each year. Other leading employers include manufacturers, engineering firms, and retail — the West Edmonton Mall is the largest shopping centre in North America, and the city is also home to the continent’s largest open-air retail development. 

Edmonton’s location is also a draw for the distribution and logistics sector, it’s home to a major intermodal freight facility, and CN Rail has announced intentions to consolidate operations in Edmonton. 

Culture and Recreation 

Edmonton has a thriving cultural scene. Known for its arts festivals (including the Edmonton Fringe), you’ll find 25 local theatre companies, contemporary dance troupes, and more. The city is also filled with museums and art galleries, including the Royal Alberta Museum and the Alberta Art Gallery.   

The ICE District — the area surrounding the Rogers Place Arena — is home to restaurants, entertainment, retail, hotels, and office space, all in the downtown core. The revitalized, mixed-use district attracts tourists and Edmontonians alike.  

Nearby, the Edmonton River Valley Park attracts visitors on foot or on bike. The park is the largest urban park in North America, and boasts more than 160 km of maintained pathways that connect 20 major parks. People flock to the park year-round to boat or canoe, for picnics, to run, walk, bike, or cross-country ski and skate in the winter months.  

South of the valley is Old Strathcona, a historic district home to retail, farmer’s markets, pop-up art galleries, and restaurants. The neighbourhood is a registered provincial historic area, populated with heritage buildings erected in the early part of the 20th century.  

On the horizon 

Avenue Living is investing in a significant renovation of its Capital Tower building, a 12-storey, 179-unit complex in the city’s downtown core, acting as a gateway to Chinatown. This set of deep retrofits includes an 85-foot art installation by renowned Edmonton artist Lance Cardinal, and this mural will be constructed as a vertical solar array to reduce greenhouse gas emissions. The refurbishment of this building will contribute to the growing community in this district, which is on the upswing.  

That sense of community is something we strive to foster in all our properties — and we see plenty of opportunities for growth across the city. 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Avenue Living: Creating Defensibility and Stability for Alternative Investors

Alternative Investments

Alternative investments are experiencing a surge in interest from advisors and investors seeking ways to drive returns.

With a focus on hard assets, Avenue Living has consistently delivered stable returns over the past decade — a trajectory that we anticipate will continue due to strong market fundamentals including population growth and limited supply.

Hear from our SVP of Capital Markets, Gabriel Millard and Head of Sales, Alex Steele, about how our vertically integrated management platform and solid financial partnerships set us apart, making Avenue Living a defensible choice for alternative investors.

Read More

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.

Capital Tower: A Beacon of Sustainability and Community Revival in Edmonton 

Capital Tower in Edmonton

On the periphery of Edmonton’s downtown core sits a 12-storey, 179-unit building that Avenue Living is transforming into a modern, affordable, and sustainable multi-family residential and commercial building. 

Built in 1970, Capital Tower is located at the gateway to the city’s Chinatown district. And as with so many buildings of its vintage, it’s due for a refresh. Upon completion, the building will provide warm, inviting homes to the vibrant surrounding community.  

Art Meets Sustainability 

Capital Tower’s revitalization focuses heavily on sustainability and reducing its environmental footprint — measures that will also provide an improved living experience for residents. Most notably, this project will include the largest vertical array of solar panels ever proposed in North America — one that also doubles as a stunning piece of art.  

The north face of the building will be home to a 26-metre (85-foot) tall mural designed and illustrated by Edmonton Indigenous artist Lance Cardinal. The mural represents the unity, coexistence, and cultural similarities between First Nations and Chinese Cultures using imagery from the Cree seven sacred grandfather teachings and the Chinese zodiac. Thanks to technology from solar panel innovator Mitrex, the landmark artwork also harnesses the energy of the sun to help power the building.  

Beneath the solar façade, new insulation on the building’s exterior walls — which will add an R-value of 12 — will improve the efficiency of the interior. Coupled with new triple-glazed windows, the measures will help keep residents comfortable year-round and allow the heating and cooling systems to run more efficiently. 

But the upgrades don’t stop with the building’s exterior. 

“We’re making improvements to almost every building system in order to reduce greenhouse gas emissions,” says Neal Shannon, Avenue Living’s Senior Vice President, Capital Projects.  

A Broader Commitment to ESG 

These improvements are part of our broader commitment to environmental, social, and governance (ESG) initiatives across our portfolio. This approximately $26 million project is made possible thanks to favourable financing terms with BMO. The arrangement allows us to access funds from both BMO and the Canada Infrastructure Bank (CIB) to complete the green retrofits, which meet CIB’s Environmental Consumption Measures (ECMs).  

“This project is separate from Avenue Living’s partnership program with CIB,” notes Daniel Veniot, Associate Vice President, Capital Markets — Debt. “But BMO has its own relationship with the CIB, allowing us to access advantageous lending terms through their programs. Together, these terms will allow us to offer residents upgraded suites at fair market prices, so we can continue to serve our target demographic.” 

Meeting the CIB’s ECMs also allows us to take part in the Canada Mortgage and Housing Corporation’s (CMHC) multi-unit loan insurance project, MLI Select. MLI Select is a points system that offers insurance incentives based on affordability, energy efficiency, and accessibility. “This project qualifies for MLI Select based on the environmental upgrades alone,” says Veniot. 

Building Comfort and Community 

The renovations and retrofits are designed to improve the experience for those who call the building home. The property will have features and amenities that foster community, including a rooftop garden, library, games and movie room, fitness centre, storage area, and refurbished commercial space on the main floor.  

The in-suite upgrades will provide increased comfort for residents while contributing to emissions reductions. Heat pumps in each suite — along with smart thermostats — will allow residents to accurately control the temperature of their environment through both heating and cooling. The addition of new makeup air units also helps improve air circulation throughout the building, eliminating cooking odours, improving air quality, and keeping temperatures more even throughout the space. These measures all contribute to improved health for occupants, according to the Canada Green Building Council

Other improvements include LED light fixtures in both common areas and suites, modernized elevators, and updated bathrooms and kitchens. Taken together, the renovations all contribute to an elevated experience for future residents.  

A Community on the Rise 

The result will be a high-quality, safe, affordable and comfortable property that contributes to the revitalization of the surrounding community. In recent years, the area has seen renewed education, hospitality, and entertainment options. The building is within walking distance of the ICE District (Edmonton’s entertainment hub), Epcor Tower (one of the newest AA office buildings in the city), and Grant MacEwan University. It’s also close to transit lines which gives residents easy access to the University of Alberta and other business districts. Nearby, the Station Lands development is revitalizing an underused part of the downtown core, transforming it into a vibrant, walkable community. 

The project, which is already underway, is set to be completed in late 2024. We’ll provide regular, more detailed updates here, so follow along for the full story as it unfolds.  

 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

What Investors Need to Know About Borrowing Amid Rising Interest Rates  

Borrowing Amid Rising Interest Rates

The past year has been punctuated with announcements of rising interest rates, as the Bank of Canada (BOC) redoubled their efforts to combat inflation with successive rate hikes. The latest, in July, brought the overnight rate up by 25 basis points to 5%, its highest since early 2001. Changes in interest-rate policy can have wide-ranging effects throughout the economy, and for real estate investors, it’s vital to interpret the different outcomes between long-term and short-term rates. Understanding the inversion of the yield curve — where long-term interest rates are lower than short-term rates — can help well-prepared property owners mitigate risk. 

Understanding the Yield Curve 

Figure 1 

During the period of rising interest rates, there has been a notable difference between prime-based borrowing rates and bond-based borrowing rates in Canada. While the prime rate has experienced significant increases (from 2.7% in March of 2022 to 6.95% in June of 2023), the Canadian 10-year bond rate has remained relatively stable over the same period. Whereas retail borrowing is often based on prime, commercial borrowing is traditionally based on long-term government bonds. Therefore, well-managed commercial borrowers will generally be less impacted — as compared to retail borrowers — by the recent rise in interest rates. One of the many upsides to indirect real estate investment through entities such as REITs is that investors are able to benefit from the relationships and knowledge of a team of experts. By indirectly investing in real estate, everyday investors can take advantage of bond-based borrowing rates through a strategic asset manager, without becoming a commercial borrower themselves. 

With the Canada Mortgage and Housing Corporation (CMHC) setting lending rates at a spread over the 10-year bond, those who have access to bond-based borrowing for long-term decisions have been in a more favourable position since the beginning of 2022. A visual representation of these trends can be observed in Figure 1. 

Figure 2 

As per Figure 2, during an inverted yield curve, where long-term interest rates are lower than short-term rates, long-term borrowing becomes cheaper than short-term borrowing. By securing financing at lower rates, long-term borrowers benefit from stability and predictability in their interest costs over an extended period. Conversely, short-term borrowers and those with variable rates may experience heightened volatility and financial strain as their borrowing costs increase in response to rising short-term interest rates. The inversion of the yield curve emphasizes how important it is for borrowers to consider duration and structure when interest rates are rising. 

Rental property owners facing rising interest rates can take advantage of the differences in duration between short-term leases and long-term debt. Using long-term debt instruments, such as a 10-year mortgage, alongside shorter lease terms, allows property owners to adjust to changing market conditions in real-time, counterbalancing the impact of higher borrowing costs. However, property owners should also consider market conditions and the resident experience before implementing this strategy. 

Interest Rates and Homeownership 

Rising interest rates — and the resulting increased cost of short-term borrowing — can have a negative impact on development projects, lowering construction activity and limiting the supply of housing units. With fewer developments, the cost of housing increases, leading to higher rents and housing prices. Scarcity of supply and increased borrowing costs compel developers to set higher prices for their projects, ultimately affecting affordability. 

A survey conducted by Chartered Professional Accountants Canada identified several barriers to homeownership among non-homeowners in the country. Rising interest rates were cited as the top obstacle by 89% of respondents, followed closely by the affordability of down payments (84%), necessary renovations (83%), and finding a home in a desired area (83%). Other challenges included taxes and mortgage payments (81% each) and income instability (69%).  

Existing homeowners also faced hurdles, with renovation costs affecting three out of five individuals, ongoing difficulties in affording home maintenance (46%), and challenges with mortgage payments, property taxes, and utility payments for varying percentages of respondents. These findings shed light on the financial obstacles Canadians encounter in their quest for homeownership, as well as the ongoing strains faced by prospective and existing homeowners. 

Navigating the Landscape 

Canada’s rising interest rates present distinct challenges for many sectors of the economy — but they also give rise to opportunities. It’s essential for borrowers to understand the benefits and drawbacks of short- and long-term interest rates and formulate their debt strategy accordingly. For property owners, understanding the interest-rate landscape, managing duration, and responding to local market conditions can help minimize borrowing costs and optimize revenue.  

Understanding how an asset manager uses different debt vehicles to mitigate risk and reduce borrowing costs allows investors to make informed decisions. Asset managers like Avenue Living, for example, can make strategic use of short- and long-term borrowing to potentially maximize returns and de-risk their portfolios. Considering an asset manager’s borrowing strategy — along with other factors — can help investors find the vehicle that’s right for them. 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Investing and Connecting with a Community: Wetaskiwin Mall’s New Mural

Wetaskiwin Mall

Inclusivity can take many forms — the people who make up an organization’s team, the causes they support, and the principles they operate under. But it can also take the form of representation in other ways like in the case of Wetaskiwin Mall, an exciting piece of original art, painted by a local, renowned Indigenous artist.  

As property owners and operators, we know our investments have an impact on the people who live and work in the communities in which we operate. We invest in spaces — multi-family homes and commercial space — that people develop deep connections with. The mural at Wetaskiwin Mall aims to showcase the culture of the community and evoke the theme of “Healing Medicine.” 

Collaborating with a Local Artist 

Painted by distinguished Indigenous artist Lance Cardinal, the 50-foot mural in the north wing of the mall symbolizes many ways of healing: ceremonial, medicinal, cultural, and healing through dance — a fitting subject given its location right outside an Alberta Health Services office and the Care Gateway Clinic. Cardinal painted the mural over ten days, with the help of an assistant.  

Cardinal, from Big Stone Cree First Nation, is an artist and entrepreneur on the rise. In 2022, he collaborated with the Edmonton Oilers to write and produce the team’s new land acknowledgement and design their Turtle Island logo, which helped raise funds for Edmonton charities, while being one of the most popular and beloved alternate designs in the team’s history. His shoe collection with Kunitz Shoes, an Edmonton-based company, is set to launch this year and is currently on display at the Royal Alberta Museum.  

Wetaskiwin, Alberta, which is 70 km south of Edmonton, is a community of around 13,000. The city is located on Treaty Six territory, bordered by two of the four Maskwacis First Nations — the Ermineskin and Samson Cree Nations — and serving two others — the Louis Bull Tribe and Montana First Nation. Wetaskiwin has rich Indigenous history; its name (which means “the hills where peace was made”) is a direct reference to the outcome of a battle between the Cree and Blackfoot. 

Bringing People Together 

Our strategy with Wetaskiwin Mall has always been to create a “community hub,” a place that provides customers with the essential services they need all in one place. In addition to national retailers and locally-owned stores and services, the mall is also home to Alberta Health Services, a pharmacy, medical clinic, optometrist, and more. Avenue Living has invested in Wetaskiwin for over a decade, with a presence that includes 401 multi-family units and 158,000 square feet of commercial space. In keeping with a key tenet of our strategy as an active manager, we have developed a deep understanding of the market and its residents.  Since acquiring the shopping center in 2017, Avenue Living has carefully curated a roster of retailers and services that reflect the needs and wants of area residents.  

“You don’t usually see local art in a retail environment like this,” says Slava Fedossenko, Director, Commercial Asset Management for Avenue Living, “but we wanted to create something that reflects the culture of the community.” 

Avenue Living is immensely proud of our partnership with Lance Cardinal and the finished mural. While it is one of the first projects of its kind for us, we have plans to ensure it is not the last, and we look forward to working with local artists in other communities to showcase the places our residents and customers call home.  

Read more about Lance Cardinal and this exciting project in The Wetaskiwin Times. 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

This Year’s Most-Read: Our Top Content in 2022

We’ve gathered the blog posts, articles, and white papers that garnered the most interest from our readers last year. They cover a diverse range of topics, from our partnership with the Canada Infrastructure Bank to the complexities of the private rental housing market, but they all come back to one thing: understanding the real estate investment landscape. As investors seek opportunity in a changing market, it’s important to explore and analyze the fundamentals that impact our industry to refine our strategy and provide value for our residents, our investors, and the communities in which we operate.

PRESS RELEASE:  

CIB COMMITS $120 MILLION TO AVENUE LIVING — THE FIRST REIT ADDRESSING MULTI-FAMILY RESIDENTIAL RETROFITS AT SCALE

This announcement is the next step in our commitment to ESG — one we officially started when we began a relationship with PRI (Principles for Responsible Investing). Our partnership with Canada Infrastructure Bank will allow us to undertake capital improvements that reduce our carbon footprint and provide comfortable homes for our residents, without compromising affordability.

WHITE PAPER:  

RE-EXAMINING A HEDGE AGAINST INFLATION: Multi-family Residential Real Estate 

This paper examines the effects inflation and rising interest rates have on affordability, and how investors may find opportunities in multi-family real estate. 

PEER-REVIEWED WHITE PAPER: 

PRIVATE RENTAL TARGET MARKETS: A COMPREHENSIVE SPECTRUM 

Our founder and CEO, Anthony Giuffre, collaborated with the University of Regina’s Dr. Grant Wilson on this examination of the North American rental housing market, identifying the lifestyles, demographics, and value propositions that make up six major groups in the housing spectrum. The peer-reviewed paper was published in the International Real Estate Review in April 2022. 

WHITE PAPER: 

DIVERSIFICATION WITH AND WITHIN REAL ESTATE  

This white paper explores how diversification in real estate portfolios — across asset types and markets — can enhance value for investors, helping them minimize risk and maximize the potential for returns. 

BLOG:  

WHY WE SEE OPPORTUNITY IN THE WORKFORCE HOUSING MARKET 

We examined factors that make the workforce housing market an attractive investment opportunity and  why it’s the focus of our multi-family strategy.  

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.