Years as a commercial broker: 7
Sales volume in 2015: $70 million
Totals deals in 2015: 17
CMP: How has the Calgary market been this year?
Vic Cotton: I think I’m in one of the most challenging markets in Canada right now for commercial financing. Most of the banks that have their head offices outside of Calgary have actually frozen funding for offices here. So the challenge is to deal more locally, with credit unions or a treasury branch – they have sort of filled the gap.
What we used to do in the past is no longer what we can do in the present. It takes twice as long to close a deal, and there are a lot more underwriting requirements on commercial transactions in Calgary. Right now the downtown market is 20% to 30% vacancy in office space. That doesn’t include people who are trying to sublet their own space.
CMP: So how do you get funding in such an environment?
VC: I have been working with the banks to formulate a plan for when buildings come up for refinancing. We have buildings downtown where the financing is up for renewal, but the building has extremely high vacancy. So we worked out a program with the banks where they will now offer things like taking the existing financing interest-only, and they will provide principal-on-interest holidays while the buildings stabilize.
CMP: Can you see a recovery anytime soon?
VC: All statistics show that we are probably not going to see a recovery for three years. That’s the office component. In the retail component – with shopping centres right now, there is huge activity with a lot of buying and selling. The challenge is qualifying companies and individuals for these purchases because of the banks’ increased underwriting requirements. As a broker, we have strong relationships with the VPs of the banks and credit unions, and that provides an advantage over a client simply walking in themselves.
CMP: You operate in Edmonton as well. Is there a big difference between it and Calgary right now?
VC: The oil & gas head offices and a lot of the oil & gas services were in Calgary. You don’t have that concentration in Edmonton, but I think it often trails Calgary. You couple the downward trend of oil & gas with the new federal and provincial government, and you have a perfect storm of difficulty for the Alberta market.
CMP: So are you looking elsewhere for loan volumes?
VC: I’m actually projected to increase to $80 or $90 million this year. We are bringing in some associates who are focusing on business outside of Calgary. The majority of my time now is servicing existing clients because their need for me has never been greater.