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Markus Gaertner

A relentless oil boom in Alberta, Canada is turning retail space in the city of Calgary into one of the country's hottest commodities.

The city's retail vacancy rate has hit an all-time low of 2.04 per cent, according to a new report by commercial real estate company Colliers International.

'This is a very strategic market because of the growth, because of the wealth here, because of the disposable income we have,' said Rob Walker, vice-president at Colliers' Calgary office.

Retail sales in Alberta rose 14.5 per cent in the first half of last year, or twice as much as the national average, according to Statistics Canada.

Calgary is at the centre of this hotbed of activity. Retail property sales in Alberta virtually mimic sales in British Columbia, despite the fact that the province has a population that is 31 per cent greater than Alberta's.

Michael Kehoe, a broker with Fairfield Commercial Real Estate who helps retailers find space in the city, said: 'Calgary is leading the country in retail sales increases.'

But this does not mean Mr Kehoe has an easy job.

William Partridge, president of the Calgary branch of the Building Owners and Managers Association of Canada, said this was because 'there is a shortage of sites'.

There are 26 big retail projects in the planning or construction stages in Calgary, totalling more than 4.9 million sqft. Most of the new retail space is scheduled to open in 2008.

The Colliers report said: 'Despite the considerable amount of new retail space coming to the marketplace over the next six months, the overall retail vacancy rate is expected to decrease to 1.8 per cent.'

One of the latest retailers to make use of the unprecedented expansion in Calgary's retail space is upscale kitchen retailer Williams-Sonoma. It opened a 4,500 sqft shop in the city's Chinook Mall in summer and posted the second-highest opening-day sales in the company's history. The shop is among the company's top 10 in sales.

Randy Fennessey, president of Colliers International in Calgary, said: 'We've had high transaction velocity, we've got steadily increasing rental rates, and absorption levels are close to record highs.'

Bank of Montreal chief economist Rick Egelton said the personal disposable income of the 3 million people living in Alberta had soared 71 per cent since early 2004.

At C$46,100 ($305,979), annual incomes in Alberta are 23 per cent above the Canadian average.

'A strong energy sector is lifting construction output, consumer spending, manufacturing output and the province's fiscal situation,' said Mario Lefebvre at the Conference Board of Canada.

The prospects are promising. Jeffrey Rubin, chief economist of CIBC World Markets, believes Alberta's economy will grow by more than 7 per cent this year.

The population of Calgary is projected to grow by 83,000 over the next four years.

Mr Kehoe forecast an increase of 7,000 housing units in the downtown core of the city by 2010.

Even with a moderation in energy prices in the decade ahead, Alberta's economic growth would outpace the rest of the country, the BMO Financial Group in a report last week.



Retail space is in hot demand as oil-wealthy Calgary splashes out