Weak natural gas prices have cast uncertainty over Calgary’s local economy and they’ve also raised questions about whether Brookfield’s occupancy rates could take a hit if energy companies slash operations to balance their books.

The weakness will put pressure on “occupancy and fundamentals” unless there’s an improvement in commodity prices, said Tom Farley, president and CEO of Brookfield’s Canadian commercial operations.

Earlier Friday, Brookfield Properties said that its net income tumbled nearly 60 per cent in the fourth quarter, compared with a year earlier when it booked one-time tax gains.

The New York-based company, a publicly traded subsidiary of Toronto-based conglomerate Brookfield Asset Management, said earnings were $181 million, (U.S.) or 35 cents per share, for the quarter ended Dec. 31.

Those results were down from $458 million in profit, or $1.16 per share in the comparable period a year ago, when Brookfield Properties factored in a tax gain from converting some of its U.S. properties into a real estate income trust.

Filtering out the tax gain, the company said it would have reported a loss of $21 million in the year-ago period. Quarterly revenue increased to $816 million from $715 million.

Brookfield said it sees 2010 outlook above market estimates as confidence in the economic recovery mounts, sending its shares higher.

The results were ahead of forecasts, largely the result of strong sales of its residential properties in Canada and lower interest costs.

Two of the company’s key cities, Toronto and Calgary, experienced lower occupancy rates in the quarter partly because of new buildings added to Brookfield’s portfolio.

In Calgary, the company reported that market vacancy was 11.6 per cent, primarily because of more sublet spaces.

It said Calgary’s occupancy rate will continue to be under pressure over the next three years.

Originally posted in The Toronto Star: http://www.thestar.com/business/article/761418–brookfield-sees-office-rebound

The weighted average rent across all apartment types and all TREB districts for the last four months of 2009 was $1,667 – in line with the 2008 weighted average of $1,672. This reflected the fact that average rents for the two most popular apartment categories moved in opposite directions, with a one per cent decrease for one-bedroom apartments and a one per cent increase for two bedroom apartments. At the district level, rent changes were quite mixed, in some cases changing at rates above or below the GTA average.

Owners of rental condominium apartments have had to consider changes in the supply and demand sides of the condominium rental market when setting rents over the past year. According to CMHC, the average condominium apartment vacancy rate increased from 0.4 per cent to 0.8 per cent between 2008 and 2009, with the stock of rented condominium apartments increasing by over 6,900 units.

While the condominium apartment vacancy rate is still substantially lower than the vacancy rate for purpose built rental apartments. The increase was still indicative of increased supply in some sectors of the rental market. Factors leading to increased vacancies included the strong growth in home ownership demand in the second half of 2009 coupled with strong condominium apartment completions(2), which would have included investor-held units to be rented out.

In fact, if you look at when the local market hit bottom in 2009 and compare it with other cities, Toronto has the hottest real estate market in the entire country. Based on real estate statistics set between the low in the city and the November 2009 home price values, it is clear to see the rapidly rising market in Toronto. This can be seen below when compared with other Canadian cities and the Canadian average.

Bottom Month Value Increase by Nov.

* Canadian Average: May 2009 9.6 %
* Vancouver: June 2009 11 %
* Calgary: June 2009 5.5 %
* Ottawa: April 2009 8.7 %
* Montreal: February 2009 5.0 %
* Halifax: February 2009 6.5 %
* Toronto: April 2009 13.6 %

Toronto hit its bottom in April 2009, and while this is two months after Montreal and Halifax, it has seen over double the increase in home values by November 2009. While Montreal took 10 months to go up five percent, Toronto was able to accomplish the same feat within only four months. Toronto’s home value increase outpaces that of every single city above, as well as being four percent better than the Canadian average.

The only other double-digit value increase was in Vancouver, but Vancouver did not hit its bottom until June 2009.

Nor did the market slow down after November. In Toronto, the market continued to rise through December and January and it is expected to continue to rise until June 2010 when the prime interest rate is set to increase. At this point, the number of homes will fall and that will even out the market so that there is an equal number of sellers and buyers, which lowers the prices.

Toronto is leading the way for Canada and the real estate market of the city is one reason why the Canadian economy is coming out of recession. While people elsewhere in Canada may have their thoughts about Toronto, there is no denying that this great city is helping everyone across Canada in this troubled economy.

The second half of 2009 was a time of surging real estate sales and prices, and that has continued into 2010. Record increases in sales were recorded from June to December 2009 when compared with June to December of 2008. However, while the January numbers for 2010 are looking good, they are below what was recorded in the first two weeks of 2008, when 1,776 homes were sold.

During the first two weeks of January, the average home price was $395,307, which is a big increase over the average home price of $332,495 during the same period in 2009. It is also above the average price for the first two weeks of 2008, which stood at $367,575. The reason that home prices are above what they were in 2008 is because there are currently more buyers than there are homes. The reason for this is because it takes time for the home builders and sellers to catch up with the trends, so until everything evens out it will be a seller’s market and that drives up the prices. Bidding wars have become common in Toronto thanks to this disparity.

This is a big contrast to the United States which is still seeing housing prices and sales falling between December and January, which continues a trend that began in 2008 and seems to be continuing. It is expected that some time later in this year the American housing market may improve, and that may again help the Canadian real estate market improve more than it already has.

Homeowners in Toronto are still waiting and seeing if they want to list their homes. Many worry that they will list their home and the housing market will collapse, leaving them with low offers that they cannot accept. However, as the homeowners begin to get used to the improved housing market and get more confident in it, they will start listing their homes and this will bring prices down.

In June, the interest rate is going to be going up according to the Bank of Canada and that will also help slow the surging real estate market, but levels for the year are expected to remain high in terms of sales in Toronto.