Dream Office Real Estate Investment Trust has taken a very large write-down of its properties in Alberta. According to a CBC Digital Media report , this REIT is taking a significant write-down of $748 million or 45 per cent of its Alberta holdings! This must be disturbing news for not only Alberta landlords but also financial institutions, including banks, pension funds, insurers and ATB Financial.
Commercial real estate is big business in Alberta. Calgary and Edmonton constitute two very large markets for commercial developers and landlords. Calgary’s downtown commercial real estate market is the second largest in the country and has been driven by the demands of energy companies and associated service firms including engineering firms, financial institutions and law and accounting firms. Edmonton’s real estate market is dominated by provincial government and provincial agencies leasing space.
A second facet of commercial real estate is the apartment rental business. Given the weakness in employment, landlords must be willing to provide incentives to attract renters or to maintain existing occupancy levels.