A boomtown cools down
After months of full-throttle growth, Calgary's economy is braking a bit -- and many Calgarians are glad to catch their breath
Gary Lamphier, The Edmonton Journal
Published: 6:25 am
CALGARY - Some days I feel old -- really old. Like today.
I'm sitting in the sun-splashed boardroom of a small real estate office on 17th Ave. S.W., chatting with a friendly young realtor named Kacey Fotopoulos about the state of Calgary's housing market.
Since local house prices peaked earlier this year after a record-busting run, buyers have dried up, prices have slid and new listings have soared. With some residents cashing out and heading home to Saskatchewan or the Maritimes, Calgary's once-torrid housing market has stalled.
"From January to June I felt like a rock star," says Fotopoulos, who works for Century 21 Bamber Realty. "Now, there's so much to choose from, buyers can take their time. It's not unheard of for people to offer $100,000 under list."
Some buyers are scoring incredible deals, she notes. After sitting on the market for 111 days, one new two-bedroom condo in northwest Calgary recently sold for $255,000 -- $64,000 below the initial list price. A luxury executive condo in trendy Eau Claire recently sold for $450,000 -- $150,000 below the asking price.
For Fotopoulos, who was born and raised in Calgary, Canada's perennial boomtown, these are uncharted waters. After four years in the real estate game, she has only seen local house prices go in one direction: straight up.
Until now. Ditto for her friends. For most, it's their first taste of anything vaguely resembling a slowdown.
"Calgarians just aren't used to this," she says. "They got very greedy. Now, they have to realize if they want a nice, balanced market, they have to price more appropriately, they need patience, and their realtor has to work a lot harder."
I ask Fotopoulos how old she is. She's 28. That's when this 53-year-old business columnist starts feeling his age.
Back in 1976, three years before Fotopoulos was born, and nearly 30 years before 17th Ave. S.W. was rechristened The Red Mile in honour of its beer-guzzling, breast-baring Flames fans, I called this neighbourhood home.
I didn't stay long, mind you. Just six months. Long enough to make a few friends -- mainly from the Maritimes, which even then exported thousands of young people to booming Alberta, where they worked for companies like Gulf Canada, PanCanadian Petroleum and Norcen Energy.
Since media jobs were scarce, I headed to Vancouver before returning to Ontario, where I broke into the newspaper business in 1978. Still, during the 1980s and 1990s, while living in Toronto and again, Vancouver, I remained a regular visitor to Calgary.
As a reporter, I spent many weeks holed up in local hotels, interviewing CEOs and banging out profiles of long-gone companies like Sceptre Resources, Renaissance Energy, BP Canada, Ranger Oil and Canadian Airlines.
Through it all, I watched Calgary grow up and out, physically and metaphorically. I witnessed booms and busts, chronicled the city's corporate successes and flops, watched new office towers sprout like weeds, and interviewed local icons like Daryl (Doc) Seaman, Dick Haskayne, Bob Blair and Jim Buckee.
I've always admired Calgary's swagger, its chutzpah, and its muscular sense of self-confidence. It's a city that doesn't take no for an answer. It believes in its own destiny, and demands to be taken seriously as a world-class city.
The results of all this striving are obvious. Calgary outstripped Vancouver as Western Canada's corporate capital long ago. As home to the current prime minister and his ideological soulmates, Calgary has also elbowed its way into the nation's political consciousness.
The city's top energy giants -- EnCana, Imperial Oil and Husky -- now rival many of the largest financial players on Bay Street. With oil prices nearing $100 US a barrel, and oilsands production poised to quadruple by 2030, Calgary's status as one of world's top energy capitals seems certain to grow.
More than one-quarter of Canada's best-paid CEOs call Calgary home. The dusty, decidedly unhip prairie burg I left in 1977 is long gone.
Today, Calgary screams with affluence and sophistication, from its mansion-filled suburbs to the designer shops, upscale restaurants and luxury car dealerships that rim the city core. Even within the confines of booming Alberta, Calgary seems increasingly like a world unto itself, unhinged from the humble prairie landscape from which it sprung.
There's also an angry, edgy side to Calgary these days. Despite its prosperity and rippling self-confidence, there's a sense the rest of Alberta doesn't "get" the city, or fully appreciate its considerable economic contributions to Canada's most prosperous province.
Rookie Tory Premier Ed Stelmach's recent decision to boost oil and gas royalties on the heels of an independent panel's report was merely the biggest flashpoint in what's shaping up to be an ongoing tussle between oilpatch interests and those of regular Albertans.
In the office towers of downtown Calgary, what's good for the oil and gas sector has always been regarded as synonymous with what's best for Alberta. That hasn't changed a bit. But public sentiment has clearly shifted. And that's left many oilpatch veterans feeling bitter.
David Yager, CEO of HSE Integrated Ltd., a TSX-listed oilfield services firm, calls the royalty panel's report "an atomic bomb" that triggered a chain of events that will decimate conventional oil and gas drilling activity in Alberta.
"There's a sense of shock, rage and betrayal," he says. "It's like Jonestown without the Kool-Aid. To use (royalty panel chairman) Bill Hunter's words, I think we pay our fair share."
In a lowrise old bank building next to Bankers Hall, Peter Linder, a veteran energy fund manager and former oil and gas analyst, echoes Yager's outrage. He calls Stelmach's plan to boost royalties by $1.4 billion in 2009 insane.
"This is the dumbest thing the Alberta government has done, possibly in the history of this province," he fumes, noting that conventional natural gas producers have been grappling with rising costs and falling prices for two years.
"What they should have done was address the fiscal regime pertaining to new oilsands developments. That was the big issue. Had they solely done that, things would be fine. But they've caused a lot of consternation. And it's solely for political reasons."
Linder says he understands the jealousy regular working stiffs might feel while fuzzy-cheeked oilpatch millionaires drive around in luxury cars or buy splashy ski pads in Canmore. But he says people should consider the big picture. "This is my biggest pet peeve, these people who are jealous. And there are lots of them. They don't understand what's going on.
"They're also benefiting -- through access to hospitals, better roads, education and so on. If we didn't have the industry boom, we wouldn't have the revenues to build these hospitals. We might even have to introduce a sales tax."
Calgary's business community isn't all about oil and gas, of course. The city is also becoming a vital hub for financial services, distribution, transportation and high-tech, says David Bissett, founder of Bissett Asset Management.
The Calgary philanthropist has watched his city mature far beyond its roots. He sees the recent slump in natural gas prices and residential real estate as little more than speed bumps.
"There's huge fundamental long-term demand for housing," Bissett says. "Some speculators and builders will have some temporary difficulties, but I think it's just a readjustment process."
Ditto for the conventional side of the oilpatch, he reckons, which is simply undergoing a "typical cyclical adjustment" before gas prices recover. As for the screams from some oilpatch execs about royalties, Bissett calls it "overdone."
So what's the outlook for Calgary? I didn't talk to a single soul who didn't feel absolutely certain the city has an extraordinarily positive future. Higher royalties or not. Sagging house prices or not.
"Calgary is still hot. There's all this talk about it being less hot, but it's still a very hot market," says Art Price, CEO of Axia NetMedia Corp.
Over at Spolumbo's Fine Foods & Deli in Inglewood, where former Calgary Stampeder Tony Spoletini serves the city's best Italian sausage to well-dressed oilpatch execs and busy soccer moms alike, I hear the same thing.
"I think people here feel very lucky and blessed," he says. "If you've got some drive and a bit of a work ethic, you can make things happen. There's lots of opportunity, there's a lot of money around."
"I think it might be slower in 2008, but if you compare 2008 with prior years, I think there's still going to be growth. I just don't think it's going to be as huge.
"In a way, a lot of people might be a little relieved."
?? The Edmonton Journal 2007
November 13, 2007 CITYBEAT - CITY OF CALGARY PRESS RELEASE
Already $4.9B and Counting in Estimated Construction for 2007
Calgary, AB ??? Calgary has reached a new record in the history
of its construction value, said City officials as they
released building permit figures for October, noting another
monster year for construction in Calgary.
While residential totals fell slightly this month from the
same time last year, non-residential construction values for
October reached $495M, up 42 per cent from October 2006.
Calgary???s year to date total construction value currently
sits at $4.95B, compared to the 2006 year-end total of
???The fact that we still have two months left in the calendar
year, and have already surpassed last year???s total
construction values gives a clear picture of just how hot the
building and development climate is in Calgary,??? said David
Watson, The City???s General Manager of Planning, Development &
Permit applications for several significant construction
projects were received in October, including office and
warehouse projects like Eighth Avenue Place, Glenmore
Professional Centre (Phase 2), Great Plains Distribution
Centre and Millard Refigerated Services (Phase 1).
Residential projects included Ascent and Bella Casa apartment
housing. Additionally, an application for the new District
#1 police station was received in October.
Building permits are a barometer of intentions in the
construction industry and are not actual construction
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