Local investors are dominating Edmonton’s office real estate market as institutions shy away from it, says a leading broker.

“Local investors are scooping up office buildings while the institutional groups are the primary sellers,” Cory Wosnack, Avison Young’s managing director in Edmonton, told Connect.

As Connect previously reported, local firm Josan Properties recently completed the purchase of the Phipps-McKinnon office tower in downtown Edmonton. Josan has begun efforts to complete a partial conversion project whereby the bottom half of the building will become rental apartments and the upper floors will remain office spaces.

Avison Young will manage the building’s office leasing component. Edmonton, like many markets in Canada, is grappling with high office vacancy due to effects of the COVID-19 pandemic and the emergence of hybrid work patterns.

Edmonton’s office market is in a different position than others of its size and larger ones, because many institutional investors are not particularly attracted to real estate right now as they rebalance their portfolios, said Wosnack.

“So, the market goes the way of local investors,” he added. “And, right now, they are absolutely dominating the [office] real estate activity.

“And, it’s something to be proud of, because many of them like [Raka Dosan, the owner of Dosan Properties] are in the front lines and the trenches. They are confident in this marketplace and they are putting their capital in it.”

Institutions prefer to invest what limited available real estate capital they have in other Canadian major markets.

“If you’re the the executive team of a pension fund organization, you can justify the investment in some other cities, and even Calgary that consumes most of the Alberta attention right now from institutional capital,” said Wosnack. “And, office as an asset is not particularly attractive to these groups either, so institutional capital goes to industrial first and residential. Calgary, Vancouver and Toronto are consuming most of the attention of that capital.”

As a result, the Edmonton office market is leaning on local and regional players.

“We have them to thank for this market continuing to propel forward for more development to happen, for more capital to be invested,” said Wosnack. “It is almost entirely done by local risk takers.”