The drop in Edmonton's commercial real estate prices is raising the concern that the past slump is happening again, according to Edmonton Sun. Basing on a recent commercial investor report by Remax, Coun. Mike Nickel has said, "The over-build, which could drive a drop in the market value assessment of downtown, there is serious risk for the city because everybody else has to make up for it." The Remax report displays a 30 per cent drop in land sales, together with the rise in commercial vacancy rates, in the first half of the year.
"How do we net out over the overall core is the real question," he said, then he cited the '90s "overbuild" that caused property assessments to drop which required the city had to resort to its fiscal stabilization reserve to cover the difference left by lower tax revenues. Lower property assessments due to the increase supply of commercial spaces was bad news to those who could not get their spaces occupied.
On that report, even if the numbers look good, it is not a representation of the entire city's real estate situation. In line with this he said, "You've got an empty building, you still have to pay some taxes on it and you've got no revenue to cover it." Coun. Mike Nickel therefore believes that more consideration must be given to Canadian Federation of Independent Business study that was released this week, in which it was stated that Canadian cities need to cut back on financial outlays to ease the burden of debt being handled by taxpayers.
In this situation, if spending is not controlled, he sees Edmonton's slow years from about ten years ago occurring again. He noted, "We went to an overbuild, then a drop in oil prices and then the bottom falls out of the market downtown. And all of a sudden taxpayers overall in the city have to make up the difference -- the industrial and the non-downtown users and the residential."
